Correlation Between CITY OFFICE and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE 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 CITY OFFICE and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITY OFFICE REIT and Costco Wholesale Corp, you can compare the effects of market volatilities on CITY OFFICE 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 CITY OFFICE with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and Costco Wholesale.
Diversification Opportunities for CITY OFFICE and Costco Wholesale
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CITY and Costco is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT 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 CITY OFFICE 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 CITY OFFICE REIT 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 CITY OFFICE i.e., CITY OFFICE and Costco Wholesale go up and down completely randomly.
Pair Corralation between CITY OFFICE and Costco Wholesale
Assuming the 90 days horizon CITY OFFICE REIT is expected to under-perform the Costco Wholesale. In addition to that, CITY OFFICE is 2.43 times more volatile than Costco Wholesale Corp. It trades about -0.16 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about -0.3 per unit of volatility. If you would invest 94,360 in Costco Wholesale Corp on October 18, 2024 and sell it today you would lose (4,900) from holding Costco Wholesale Corp or give up 5.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITY OFFICE REIT vs. Costco Wholesale Corp
Performance |
| Timeline |
| CITY OFFICE REIT |
| Costco Wholesale Corp |
CITY OFFICE and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and Costco Wholesale
The main advantage of trading using opposite CITY OFFICE and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE 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.| CITY OFFICE vs. PNC Financial Services | CITY OFFICE vs. American Eagle Outfitters | CITY OFFICE vs. BOS BETTER ONLINE | CITY OFFICE vs. Urban Outfitters |
| Costco Wholesale vs. CITY OFFICE REIT | Costco Wholesale vs. alstria office REIT AG | Costco Wholesale vs. American Eagle Outfitters | Costco Wholesale vs. COFCO Joycome Foods |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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