Correlation Between SYSTEMAIR and COSTCO WHOLESALE
Can any of the company-specific risk be diversified away by investing in both SYSTEMAIR 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 SYSTEMAIR and COSTCO WHOLESALE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SYSTEMAIR AB and COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on SYSTEMAIR 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 SYSTEMAIR with a short position of COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYSTEMAIR and COSTCO WHOLESALE.
Diversification Opportunities for SYSTEMAIR and COSTCO WHOLESALE
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SYSTEMAIR and COSTCO is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB 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 SYSTEMAIR 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 SYSTEMAIR AB 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 SYSTEMAIR i.e., SYSTEMAIR and COSTCO WHOLESALE go up and down completely randomly.
Pair Corralation between SYSTEMAIR and COSTCO WHOLESALE
Assuming the 90 days trading horizon SYSTEMAIR AB is expected to under-perform the COSTCO WHOLESALE. But the stock apears to be less risky and, when comparing its historical volatility, SYSTEMAIR AB is 1.21 times less risky than COSTCO WHOLESALE. The stock trades about -0.66 of its potential returns per unit of risk. The COSTCO WHOLESALE CDR is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest 3,060 in COSTCO WHOLESALE CDR on October 16, 2024 and sell it today you would lose (140.00) from holding COSTCO WHOLESALE CDR or give up 4.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SYSTEMAIR AB vs. COSTCO WHOLESALE CDR
Performance |
| Timeline |
| SYSTEMAIR AB |
| COSTCO WHOLESALE CDR |
SYSTEMAIR and COSTCO WHOLESALE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SYSTEMAIR and COSTCO WHOLESALE
The main advantage of trading using opposite SYSTEMAIR and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SYSTEMAIR 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.| SYSTEMAIR vs. WIMFARM SA EO | SYSTEMAIR vs. PICKN PAY STORES | SYSTEMAIR vs. Ross Stores | SYSTEMAIR vs. Federal Agricultural Mortgage |
| COSTCO WHOLESALE vs. Wizz Air Holdings | COSTCO WHOLESALE vs. SYSTEMAIR AB | COSTCO WHOLESALE vs. CSSC Offshore Marine | COSTCO WHOLESALE vs. SEALED AIR |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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