Correlation Between PLAYMATES TOYS and COSTCO WHOLESALE
Can any of the company-specific risk be diversified away by investing in both PLAYMATES TOYS 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 PLAYMATES TOYS and COSTCO WHOLESALE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLAYMATES TOYS and COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on PLAYMATES TOYS 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 PLAYMATES TOYS with a short position of COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYMATES TOYS and COSTCO WHOLESALE.
Diversification Opportunities for PLAYMATES TOYS and COSTCO WHOLESALE
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PLAYMATES and COSTCO is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding PLAYMATES TOYS and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR and PLAYMATES TOYS 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 PLAYMATES TOYS 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 CDR has no effect on the direction of PLAYMATES TOYS i.e., PLAYMATES TOYS and COSTCO WHOLESALE go up and down completely randomly.
Pair Corralation between PLAYMATES TOYS and COSTCO WHOLESALE
Assuming the 90 days trading horizon PLAYMATES TOYS is expected to under-perform the COSTCO WHOLESALE. In addition to that, PLAYMATES TOYS is 5.0 times more volatile than COSTCO WHOLESALE CDR. It trades about -0.05 of its total potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.04 per unit of volatility. If you would invest 2,880 in COSTCO WHOLESALE CDR on October 25, 2024 and sell it today you would earn a total of 20.00 from holding COSTCO WHOLESALE CDR or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLAYMATES TOYS vs. COSTCO WHOLESALE CDR
Performance |
| Timeline |
| PLAYMATES TOYS |
| COSTCO WHOLESALE CDR |
PLAYMATES TOYS and COSTCO WHOLESALE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLAYMATES TOYS and COSTCO WHOLESALE
The main advantage of trading using opposite PLAYMATES TOYS and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYMATES TOYS 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.| PLAYMATES TOYS vs. Iridium Communications | PLAYMATES TOYS vs. Spirent Communications plc | PLAYMATES TOYS vs. Cairo Communication SpA | PLAYMATES TOYS vs. CITIC Telecom International |
| COSTCO WHOLESALE vs. Compagnie Plastic Omnium | COSTCO WHOLESALE vs. Carnegie Clean Energy | COSTCO WHOLESALE vs. Aristocrat Leisure Limited | COSTCO WHOLESALE vs. Clean Energy Fuels |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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