Correlation Between Apple and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Costco Wholesale Corp, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Costco Wholesale.
Diversification Opportunities for Apple and Costco Wholesale
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and Costco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and Costco Wholesale go up and down completely randomly.
Pair Corralation between Apple and Costco Wholesale
Assuming the 90 days trading horizon Apple Inc is expected to generate 1.12 times more return on investment than Costco Wholesale. However, Apple is 1.12 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 0.11 per unit of risk. If you would invest 17,590 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 4,320 from holding Apple Inc or generate 24.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Costco Wholesale Corp
Performance |
| Timeline |
| Apple Inc |
| Costco Wholesale Corp |
Apple and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Costco Wholesale
The main advantage of trading using opposite Apple and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Elmos Semiconductor SE | Apple vs. JAPAN TOBACCO UNSPADR12 | Apple vs. Samsung Electronics Co | Apple vs. BE Semiconductor Industries |
| Costco Wholesale vs. Apple Inc | Costco Wholesale vs. Apple Inc | Costco Wholesale vs. Microsoft | Costco Wholesale vs. Microsoft |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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