Correlation Between IA FINANCIAL and BJs Wholesale

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

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

Diversification Opportunities for IA FINANCIAL and BJs Wholesale

0.91

Correlation Coefficient

IA FINANCIAL  BJs Wholesale

Almost no diversification

The 3 months correlation between 1OD and BJs is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding IA FINANCIAL P 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 IA FINANCIAL 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 IA FINANCIAL P 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 IA FINANCIAL i.e., IA FINANCIAL and BJs Wholesale go up and down completely randomly.

Pair Corralation between IA FINANCIAL and BJs Wholesale

Assuming the 90 days horizon IA FINANCIAL is expected to generate 1.05 times less return on investment than BJs Wholesale. In addition to that, IA FINANCIAL is 1.29 times more volatile than BJs Wholesale Club. It trades about 0.13 of its total potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.17 per unit of volatility. If you would invest  7,400  in BJs Wholesale Club on September 29, 2024 and sell it today you would earn a total of  1,450  from holding BJs Wholesale Club or generate 19.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

IA FINANCIAL P  vs.  BJs Wholesale Club

IA FINANCIAL P

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IA FINANCIAL P are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, IA FINANCIAL reported solid returns over the last few months and may actually be approaching a breakup point.

BJs Wholesale Club

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Wholesale Club are ranked lower than 13 (%) 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 IA FINANCIAL and BJs Wholesale

The main advantage of trading using opposite IA FINANCIAL and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA FINANCIAL 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 IA FINANCIAL P 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.