Correlation Between Costco Wholesale and Light Science
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Light Science 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 Light Science 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 Light Science Technologies, you can compare the effects of market volatilities on Costco Wholesale and Light Science 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 Light Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Light Science.
Diversification Opportunities for Costco Wholesale and Light Science
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Costco and Light is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Light Science Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Science Techno 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 Light Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Science Techno has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Light Science go up and down completely randomly.
Pair Corralation between Costco Wholesale and Light Science
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.36 times more return on investment than Light Science. However, Costco Wholesale Corp is 2.74 times less risky than Light Science. It trades about 0.01 of its potential returns per unit of risk. Light Science Technologies is currently generating about -0.26 per unit of risk. If you would invest 94,753 in Costco Wholesale Corp on October 23, 2024 and sell it today you would earn a total of 156.00 from holding Costco Wholesale Corp or generate 0.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Costco Wholesale Corp vs. Light Science Technologies
Performance |
| Timeline |
| Costco Wholesale Corp |
| Light Science Techno |
Costco Wholesale and Light Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Light Science
The main advantage of trading using opposite Costco Wholesale and Light Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Light Science 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 Light Science will offset losses from the drop in Light Science's long position.| Costco Wholesale vs. Home Depot | Costco Wholesale vs. Weiss Korea Opportunity | Costco Wholesale vs. River and Mercantile | Costco Wholesale vs. Chrysalis Investments |
| Light Science vs. Costco Wholesale Corp | Light Science vs. Moneta Money Bank | Light Science vs. Manulife Financial Corp | Light Science vs. Bankers Investment Trust |
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 Stocks Directory module to find actively traded stocks across global markets.
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