Correlation Between Costco Wholesale and European Metals
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and European Metals 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 European Metals 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 European Metals Holdings, you can compare the effects of market volatilities on Costco Wholesale and European Metals 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 European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and European Metals.
Diversification Opportunities for Costco Wholesale and European Metals
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Costco and European is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings 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 European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and European Metals go up and down completely randomly.
Pair Corralation between Costco Wholesale and European Metals
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 11.46 times more return on investment than European Metals. However, Costco Wholesale is 11.46 times more volatile than European Metals Holdings. It trades about 0.07 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.11 per unit of risk. If you would invest 81,492 in Costco Wholesale Corp on October 25, 2024 and sell it today you would earn a total of 12,851 from holding Costco Wholesale Corp or generate 15.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Costco Wholesale Corp vs. European Metals Holdings
Performance |
| Timeline |
| Costco Wholesale Corp |
| European Metals Holdings |
Costco Wholesale and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and European Metals
The main advantage of trading using opposite Costco Wholesale and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Costco Wholesale vs. Gamma Communications PLC | Costco Wholesale vs. Spirent Communications plc | Costco Wholesale vs. URU Metals | Costco Wholesale vs. Verizon Communications |
| European Metals vs. Gamma Communications PLC | European Metals vs. InterContinental Hotels Group | European Metals vs. mobilezone holding AG | European Metals vs. Batm Advanced Communications |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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