Correlation Between Costco Wholesale and Batm Advanced
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Batm Advanced 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 Batm Advanced 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 Batm Advanced Communications, you can compare the effects of market volatilities on Costco Wholesale and Batm Advanced 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 Batm Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Batm Advanced.
Diversification Opportunities for Costco Wholesale and Batm Advanced
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and Batm is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Batm Advanced Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batm Advanced Commun 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 Batm Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batm Advanced Commun has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Batm Advanced go up and down completely randomly.
Pair Corralation between Costco Wholesale and Batm Advanced
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 6.9 times more return on investment than Batm Advanced. However, Costco Wholesale is 6.9 times more volatile than Batm Advanced Communications. It trades about 0.04 of its potential returns per unit of risk. Batm Advanced Communications is currently generating about -0.02 per unit of risk. If you would invest 45,610 in Costco Wholesale Corp on October 11, 2024 and sell it today you would earn a total of 46,894 from holding Costco Wholesale Corp or generate 102.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale Corp vs. Batm Advanced Communications
Performance |
| Timeline |
| Costco Wholesale Corp |
| Batm Advanced Commun |
Costco Wholesale and Batm Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Batm Advanced
The main advantage of trading using opposite Costco Wholesale and Batm Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Batm Advanced 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 Batm Advanced will offset losses from the drop in Batm Advanced'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 |
| Batm Advanced vs. Axfood AB | Batm Advanced vs. Odfjell Drilling | Batm Advanced vs. Dairy Farm International | Batm Advanced vs. Premier Foods PLC |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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