Correlation Between Brown Forman and BJs Wholesale
Can any of the company-specific risk be diversified away by investing in both Brown Forman 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 Brown Forman and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brown Forman and BJs Wholesale Club, you can compare the effects of market volatilities on Brown Forman 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 Brown Forman with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brown Forman and BJs Wholesale.
Diversification Opportunities for Brown Forman and BJs Wholesale
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brown and BJs is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Brown Forman 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 Brown Forman 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 Brown Forman 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 Brown Forman i.e., Brown Forman and BJs Wholesale go up and down completely randomly.
Pair Corralation between Brown Forman and BJs Wholesale
Given the investment horizon of 90 days Brown Forman is expected to generate 1.08 times more return on investment than BJs Wholesale. However, Brown Forman is 1.08 times more volatile than BJs Wholesale Club. It trades about 0.11 of its potential returns per unit of risk. BJs Wholesale Club is currently generating about -0.06 per unit of risk. If you would invest 2,706 in Brown Forman on September 10, 2025 and sell it today you would earn a total of 309.00 from holding Brown Forman or generate 11.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brown Forman vs. BJs Wholesale Club
Performance |
| Timeline |
| Brown Forman |
| BJs Wholesale Club |
Brown Forman and BJs Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brown Forman and BJs Wholesale
The main advantage of trading using opposite Brown Forman and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brown Forman 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.| Brown Forman vs. The Clorox | Brown Forman vs. Hormel Foods | Brown Forman vs. Coca Cola Consolidated | Brown Forman vs. BJs Wholesale Club |
| BJs Wholesale vs. Hormel Foods | BJs Wholesale vs. Coca Cola Consolidated | BJs Wholesale vs. Brown Forman | BJs Wholesale vs. The Clorox |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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