Correlation Between BJs Wholesale and Biogen

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

Diversification Opportunities for BJs Wholesale and Biogen

-0.85

Correlation Coefficient

BJs Wholesale  Biogen

Pay attention - limited upside

The 3 months correlation between BJs and Biogen is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Biogen go up and down completely randomly.

Pair Corralation between BJs Wholesale and Biogen

Assuming the 90 days horizon BJs Wholesale Club is expected to generate 1.02 times more return on investment than Biogen. However, BJs Wholesale is 1.02 times more volatile than Biogen Inc. It trades about 0.23 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.18 per unit of risk. If you would invest  7,200  in BJs Wholesale Club on September 18, 2024 and sell it today you would earn a total of  2,000  from holding BJs Wholesale Club or generate 27.78% return on investment over 90 days.

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

BJs Wholesale Club  vs.  Biogen Inc

BJs Wholesale Club

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Wholesale Club are ranked lower than 18 (%) 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.

Biogen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biogen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BJs Wholesale and Biogen

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

The idea behind BJs Wholesale Club and Biogen 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.