Correlation Between BJs Wholesale and Dicks Sporting
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Dicks Sporting 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 BJs Wholesale and Dicks Sporting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Wholesale Club and Dicks Sporting Goods, you can compare the effects of market volatilities on BJs Wholesale and Dicks Sporting 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 BJs Wholesale with a short position of Dicks Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Dicks Sporting.
Diversification Opportunities for BJs Wholesale and Dicks Sporting
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BJs and Dicks is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Dicks Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dicks Sporting Goods and BJs Wholesale 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 BJs Wholesale Club are associated (or correlated) with Dicks Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dicks Sporting Goods has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Dicks Sporting go up and down completely randomly.
Pair Corralation between BJs Wholesale and Dicks Sporting
Allowing for the 90-day total investment horizon BJs Wholesale is expected to generate 1.98 times less return on investment than Dicks Sporting. But when comparing it to its historical volatility, BJs Wholesale Club is 1.25 times less risky than Dicks Sporting. It trades about 0.13 of its potential returns per unit of risk. Dicks Sporting Goods is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 15,003 in Dicks Sporting Goods on January 24, 2024 and sell it today you would earn a total of 4,864 from holding Dicks Sporting Goods or generate 32.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. Dicks Sporting Goods
Performance |
| Timeline |
| BJs Wholesale Club |
| Dicks Sporting Goods |
BJs Wholesale and Dicks Sporting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Dicks Sporting
The main advantage of trading using opposite BJs Wholesale and Dicks Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Dicks Sporting 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 Dicks Sporting will offset losses from the drop in Dicks Sporting's long position.| BJs Wholesale vs. Big Lots | BJs Wholesale vs. Aquagold International | BJs Wholesale vs. Thrivent High Yield | BJs Wholesale vs. Morningstar Unconstrained Allocation |
Check out your portfolio center.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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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