Correlation Between Costco Wholesale and Associated British
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Associated British 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 Costco Wholesale and Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale Corp and Associated British Foods, you can compare the effects of market volatilities on Costco Wholesale and Associated British 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 Costco Wholesale with a short position of Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Associated British.
Diversification Opportunities for Costco Wholesale and Associated British
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and Associated is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and Costco 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 Costco Wholesale Corp are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Associated British go up and down completely randomly.
Pair Corralation between Costco Wholesale and Associated British
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 1.06 times more return on investment than Associated British. However, Costco Wholesale is 1.06 times more volatile than Associated British Foods. It trades about -0.36 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.44 per unit of risk. If you would invest 99,197 in Costco Wholesale Corp on October 11, 2024 and sell it today you would lose (6,693) from holding Costco Wholesale Corp or give up 6.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Costco Wholesale Corp vs. Associated British Foods
Performance |
| Timeline |
| Costco Wholesale Corp |
| Associated British Foods |
Costco Wholesale and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Associated British
The main advantage of trading using opposite Costco Wholesale and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Costco Wholesale vs. PPHE Hotel Group | Costco Wholesale vs. Wyndham Hotels Resorts | Costco Wholesale vs. Gamma Communications PLC | Costco Wholesale vs. Infrastrutture Wireless Italiane |
| Associated British vs. Synchrony Financial | Associated British vs. Sydbank | Associated British vs. International Biotechnology Trust | Associated British vs. FinecoBank SpA |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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