Correlation Between MT Bank and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both MT Bank and Costco 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 MT Bank and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT Bank Corp and Costco Wholesale Corp, you can compare the effects of market volatilities on MT Bank and Costco 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 MT Bank with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and Costco Wholesale.
Diversification Opportunities for MT Bank and Costco Wholesale
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 0JW2 and Costco is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and Costco Wholesale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale Corp and MT Bank 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 MT Bank Corp are associated (or correlated) with Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale Corp has no effect on the direction of MT Bank i.e., MT Bank and Costco Wholesale go up and down completely randomly.
Pair Corralation between MT Bank and Costco Wholesale
Assuming the 90 days trading horizon MT Bank is expected to generate 5.99 times less return on investment than Costco Wholesale. But when comparing it to its historical volatility, MT Bank Corp is 13.4 times less risky than Costco Wholesale. It trades about 0.12 of its potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 53,613 in Costco Wholesale Corp on October 25, 2024 and sell it today you would earn a total of 40,730 from holding Costco Wholesale Corp or generate 75.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.5% |
| Values | Daily Returns |
MT Bank Corp vs. Costco Wholesale Corp
Performance |
| Timeline |
| MT Bank Corp |
| Costco Wholesale Corp |
MT Bank and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MT Bank and Costco Wholesale
The main advantage of trading using opposite MT Bank and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank position performs unexpectedly, Costco 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.| MT Bank vs. Costco Wholesale Corp | MT Bank vs. Games Workshop Group | MT Bank vs. Hochschild Mining plc | MT Bank vs. Tata Steel Limited |
| Costco Wholesale vs. Gamma Communications PLC | Costco Wholesale vs. Spirent Communications plc | Costco Wholesale vs. URU Metals | Costco Wholesale vs. Verizon 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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