Correlation Between Biogen and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Biogen 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 Biogen and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biogen Inc and Costco Wholesale, you can compare the effects of market volatilities on Biogen 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 Biogen with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biogen and Costco Wholesale.
Diversification Opportunities for Biogen and Costco Wholesale
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Biogen and Costco is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Biogen Inc and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale and Biogen 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 Biogen 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 has no effect on the direction of Biogen i.e., Biogen and Costco Wholesale go up and down completely randomly.
Pair Corralation between Biogen and Costco Wholesale
Assuming the 90 days trading horizon Biogen Inc is expected to under-perform the Costco Wholesale. In addition to that, Biogen is 1.1 times more volatile than Costco Wholesale. It trades about -0.33 of its total potential returns per unit of risk. Costco Wholesale is currently generating about 0.24 per unit of volatility. If you would invest 1,784,304 in Costco Wholesale on August 27, 2024 and sell it today you would earn a total of 152,196 from holding Costco Wholesale or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biogen Inc vs. Costco Wholesale
Performance |
| Timeline |
| Biogen Inc |
| Costco Wholesale |
Biogen and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biogen and Costco Wholesale
The main advantage of trading using opposite Biogen and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biogen 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.| Biogen vs. GMxico Transportes SAB | Biogen vs. CVS Health | Biogen vs. Verizon Communications | Biogen vs. Lloyds Banking Group |
| Costco Wholesale vs. Hoteles City Express | Costco Wholesale vs. DXC Technology | Costco Wholesale vs. Verizon Communications | Costco Wholesale vs. Grupo Sports World |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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