Correlation Between MARKET VECTR and BJs Wholesale

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

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

Diversification Opportunities for MARKET VECTR and BJs Wholesale

0.94

Correlation Coefficient

MARKET VECTR  BJs Wholesale

Almost no diversification

The 3 months correlation between MARKET and BJs is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding MARKET VECTR RETAIL 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 MARKET VECTR 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 MARKET VECTR RETAIL 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 MARKET VECTR i.e., MARKET VECTR and BJs Wholesale go up and down completely randomly.

Pair Corralation between MARKET VECTR and BJs Wholesale

Assuming the 90 days trading horizon MARKET VECTR is expected to generate 1.49 times less return on investment than BJs Wholesale. But when comparing it to its historical volatility, MARKET VECTR RETAIL is 1.89 times less risky than BJs Wholesale. It trades about 0.27 of its potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  7,200  in BJs Wholesale Club on September 2, 2024 and sell it today you would earn a total of  1,850  from holding BJs Wholesale Club or generate 25.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

MARKET VECTR RETAIL  vs.  BJs Wholesale Club

MARKET VECTR RETAIL

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MARKET VECTR RETAIL are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, MARKET VECTR exhibited solid returns over the last few months and may actually be approaching a breakup point.

BJs Wholesale Club

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Wholesale Club are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BJs Wholesale reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MARKET VECTR and BJs Wholesale

The main advantage of trading using opposite MARKET VECTR and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MARKET VECTR 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 MARKET VECTR RETAIL 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.