Correlation Between Hyster-Yale Materials and BJs Wholesale

Can any of the company-specific risk be diversified away by investing in both Hyster-Yale Materials and BJs Wholesale at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hyster-Yale Materials and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hyster Yale Materials Handling and BJs Wholesale Club, you can compare the effects of market volatilities on Hyster-Yale Materials and BJs Wholesale and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hyster-Yale Materials with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyster-Yale Materials and BJs Wholesale.

Diversification Opportunities for Hyster-Yale Materials and BJs Wholesale

-0.13

Correlation Coefficient

Hyster-Yale Materials  BJs Wholesale

Good diversification

The 3 months correlation between Hyster-Yale and BJs is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hyster Yale Materials Handling and BJs Wholesale Club in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Wholesale Club and Hyster-Yale Materials is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hyster Yale Materials Handling are associated (or correlated) with BJs Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Wholesale Club has no effect on the direction of Hyster-Yale Materials i.e., Hyster-Yale Materials and BJs Wholesale go up and down completely randomly.

Pair Corralation between Hyster-Yale Materials and BJs Wholesale

Assuming the 90 days trading horizon Hyster-Yale Materials is expected to generate 10.11 times less return on investment than BJs Wholesale. In addition to that, Hyster-Yale Materials is 1.73 times more volatile than BJs Wholesale Club. It trades about 0.01 of its total potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.24 per unit of volatility. If you would invest  7,000  in BJs Wholesale Club on September 5, 2024 and sell it today you would earn a total of  2,000  from holding BJs Wholesale Club or generate 28.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hyster Yale Materials Handling  vs.  BJs Wholesale Club

Hyster Yale Materials

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hyster Yale Materials Handling are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Hyster-Yale Materials is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BJs Wholesale Club

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Wholesale Club are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BJs Wholesale reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyster-Yale Materials and BJs Wholesale

The main advantage of trading using opposite Hyster-Yale Materials and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyster-Yale Materials position performs unexpectedly, BJs Wholesale can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BJs Wholesale will offset losses from the drop in BJs Wholesale's long position.

The idea behind Hyster Yale Materials Handling and BJs Wholesale Club pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .