Correlation Between AGF Management and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both AGF Management 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 AGF Management and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGF Management Limited and Costco Wholesale Corp, you can compare the effects of market volatilities on AGF Management 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 AGF Management with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Costco Wholesale.
Diversification Opportunities for AGF Management and Costco Wholesale
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AGF and Costco is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited 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 AGF Management 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 AGF Management Limited 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 AGF Management i.e., AGF Management and Costco Wholesale go up and down completely randomly.
Pair Corralation between AGF Management and Costco Wholesale
Assuming the 90 days horizon AGF Management Limited is expected to generate 1.49 times more return on investment than Costco Wholesale. However, AGF Management is 1.49 times more volatile than Costco Wholesale Corp. It trades about -0.11 of its potential returns per unit of risk. Costco Wholesale Corp is currently generating about -0.37 per unit of risk. If you would invest 725.00 in AGF Management Limited on December 13, 2024 and sell it today you would lose (60.00) from holding AGF Management Limited or give up 8.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGF Management Limited vs. Costco Wholesale Corp
Performance |
| Timeline |
| AGF Management |
| Costco Wholesale Corp |
AGF Management and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGF Management and Costco Wholesale
The main advantage of trading using opposite AGF Management and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management 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.| AGF Management vs. Heidelberg Materials AG | ||
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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