Correlation Between Allstate and COSTCO WHOLESALE
Can any of the company-specific risk be diversified away by investing in both Allstate 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 Allstate and COSTCO WHOLESALE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Allstate and COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on Allstate 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 Allstate with a short position of COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allstate and COSTCO WHOLESALE.
Diversification Opportunities for Allstate and COSTCO WHOLESALE
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Allstate and COSTCO is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding The Allstate 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 Allstate 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 The Allstate 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 Allstate i.e., Allstate and COSTCO WHOLESALE go up and down completely randomly.
Pair Corralation between Allstate and COSTCO WHOLESALE
Assuming the 90 days horizon The Allstate is expected to generate 0.91 times more return on investment than COSTCO WHOLESALE. However, The Allstate is 1.1 times less risky than COSTCO WHOLESALE. It trades about 0.14 of its potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.07 per unit of risk. If you would invest 14,793 in The Allstate on September 3, 2024 and sell it today you would earn a total of 4,797 from holding The Allstate or generate 32.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Allstate vs. COSTCO WHOLESALE CDR
Performance |
| Timeline |
| Allstate |
| COSTCO WHOLESALE CDR |
Allstate and COSTCO WHOLESALE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allstate and COSTCO WHOLESALE
The main advantage of trading using opposite Allstate and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allstate 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.| Allstate vs. COSTCO WHOLESALE CDR | Allstate vs. RETAIL FOOD GROUP | Allstate vs. National Health Investors | Allstate vs. National Retail Properties |
| COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Superior Plus Corp | COSTCO WHOLESALE vs. NMI Holdings | COSTCO WHOLESALE vs. Origin Agritech |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |