Correlation Between BASF SE and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both BASF SE 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 BASF SE and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BASF SE and Costco Wholesale, you can compare the effects of market volatilities on BASF SE 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 BASF SE with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and Costco Wholesale.
Diversification Opportunities for BASF SE and Costco Wholesale
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BASF and Costco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale and BASF SE 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 BASF SE 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 has no effect on the direction of BASF SE i.e., BASF SE and Costco Wholesale go up and down completely randomly.
Pair Corralation between BASF SE and Costco Wholesale
If you would invest 1,781,700 in Costco Wholesale on September 3, 2024 and sell it today you would earn a total of 198,300 from holding Costco Wholesale or generate 11.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BASF SE vs. Costco Wholesale
Performance |
| Timeline |
| BASF SE |
| Costco Wholesale |
BASF SE and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASF SE and Costco Wholesale
The main advantage of trading using opposite BASF SE and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASF SE 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.| BASF SE vs. Deutsche Bank Aktiengesellschaft | BASF SE vs. Micron Technology | BASF SE vs. Taiwan Semiconductor Manufacturing | BASF SE vs. Applied Materials |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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