Correlation Between BJs Wholesale and Five Below
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale and Five Below 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 Five Below 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 Five Below, you can compare the effects of market volatilities on BJs Wholesale and Five Below 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 Five Below. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Five Below.
Diversification Opportunities for BJs Wholesale and Five Below
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between BJs and Five is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below 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 Five Below. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Below has no effect on the direction of BJs Wholesale i.e., BJs Wholesale and Five Below go up and down completely randomly.
Pair Corralation between BJs Wholesale and Five Below
Allowing for the 90-day total investment horizon BJs Wholesale Club is expected to generate 0.72 times more return on investment than Five Below. However, BJs Wholesale Club is 1.38 times less risky than Five Below. It trades about 0.11 of its potential returns per unit of risk. Five Below is currently generating about -0.11 per unit of risk. If you would invest 6,471 in BJs Wholesale Club on January 20, 2024 and sell it today you would earn a total of 786.00 from holding BJs Wholesale Club or generate 12.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. Five Below
Performance |
| Timeline |
| BJs Wholesale Club |
| Five Below |
BJs Wholesale and Five Below Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Five Below
The main advantage of trading using opposite BJs Wholesale and Five Below positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale position performs unexpectedly, Five Below 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 Five Below will offset losses from the drop in Five Below's long position.| BJs Wholesale vs. Aquagold International | BJs Wholesale vs. Morningstar Unconstrained Allocation | BJs Wholesale vs. Thrivent High Yield | BJs Wholesale vs. Via Renewables |
| Five Below vs. OReilly Automotive | Five Below vs. AutoZone | Five Below vs. Genuine Parts Co | Five Below 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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