Correlation Between LION ONE and BJs Wholesale

Can any of the company-specific risk be diversified away by investing in both LION ONE 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 LION ONE and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LION ONE METALS and BJs Wholesale Club, you can compare the effects of market volatilities on LION ONE 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 LION ONE with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and BJs Wholesale.

Diversification Opportunities for LION ONE and BJs Wholesale

-0.66

Correlation Coefficient

LION ONE  BJs Wholesale

Excellent diversification

The 3 months correlation between LION and BJs is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS 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 LION ONE 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 LION ONE METALS 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 LION ONE i.e., LION ONE and BJs Wholesale go up and down completely randomly.

Pair Corralation between LION ONE and BJs Wholesale

Assuming the 90 days trading horizon LION ONE METALS is expected to generate 5.29 times more return on investment than BJs Wholesale. However, LION ONE is 5.29 times more volatile than BJs Wholesale Club. It trades about 0.19 of its potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.05 per unit of risk. If you would invest  16.00  in LION ONE METALS on October 20, 2024 and sell it today you would earn a total of  4.00  from holding LION ONE METALS or generate 25.0% return on investment over 90 days.

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

LION ONE METALS  vs.  BJs Wholesale Club

LION ONE METALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LION ONE METALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, LION ONE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BJs Wholesale Club

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Wholesale Club are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, BJs Wholesale may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with LION ONE and BJs Wholesale

The main advantage of trading using opposite LION ONE and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE 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 LION ONE METALS 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.