Correlation Between Dicks Sporting and BJs Wholesale
Can any of the company-specific risk be diversified away by investing in both Dicks Sporting 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 Dicks Sporting and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dicks Sporting Goods and BJs Wholesale Club, you can compare the effects of market volatilities on Dicks Sporting 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 Dicks Sporting with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicks Sporting and BJs Wholesale.
Diversification Opportunities for Dicks Sporting and BJs Wholesale
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dicks and BJs is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods 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 Dicks Sporting 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 Dicks Sporting Goods 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 Dicks Sporting i.e., Dicks Sporting and BJs Wholesale go up and down completely randomly.
Pair Corralation between Dicks Sporting and BJs Wholesale
Considering the 90-day investment horizon Dicks Sporting Goods is expected to under-perform the BJs Wholesale. But the stock apears to be less risky and, when comparing its historical volatility, Dicks Sporting Goods is 1.01 times less risky than BJs Wholesale. The stock trades about -0.22 of its potential returns per unit of risk. The BJs Wholesale Club is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 7,640 in BJs Wholesale Club on January 18, 2024 and sell it today you would lose (14.00) from holding BJs Wholesale Club or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dicks Sporting Goods vs. BJs Wholesale Club
Performance |
| Timeline |
| Dicks Sporting Goods |
| BJs Wholesale Club |
Dicks Sporting and BJs Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dicks Sporting and BJs Wholesale
The main advantage of trading using opposite Dicks Sporting and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicks Sporting 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.| Dicks Sporting vs. RH | Dicks Sporting vs. Best Buy Co | Dicks Sporting vs. AutoZone | Dicks Sporting vs. Williams Sonoma |
| BJs Wholesale vs. Big Lots | BJs Wholesale vs. Dollar Tree | BJs Wholesale vs. Dicks Sporting Goods | BJs Wholesale vs. Williams Sonoma |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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