Correlation Between BJs Wholesale and Apple

Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on BJs Wholesale and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Apple.

Diversification Opportunities for BJs Wholesale and Apple

0.88

Correlation Coefficient

BJs Wholesale  Apple

Very poor diversification

The 3 months correlation between BJs and Apple is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Apple go up and down completely randomly.

Pair Corralation between BJs Wholesale and Apple

Assuming the 90 days horizon BJs Wholesale Club is expected to generate 1.38 times more return on investment than Apple. However, BJs Wholesale is 1.38 times more volatile than Apple Inc. It trades about 0.21 of its potential returns per unit of risk. Apple Inc is currently generating about 0.2 per unit of risk. If you would invest  7,250  in BJs Wholesale Club on September 12, 2024 and sell it today you would earn a total of  1,750  from holding BJs Wholesale Club or generate 24.14% return on investment over 90 days.

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

BJs Wholesale Club  vs.  Apple Inc

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.

Apple Inc

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BJs Wholesale and Apple

The main advantage of trading using opposite BJs Wholesale and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.

The idea behind BJs Wholesale Club and Apple Inc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.