Correlation Between Bankers Investment and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Bankers Investment 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 Bankers Investment and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bankers Investment Trust and Costco Wholesale Corp, you can compare the effects of market volatilities on Bankers Investment 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 Bankers Investment with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankers Investment and Costco Wholesale.
Diversification Opportunities for Bankers Investment and Costco Wholesale
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bankers and Costco is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bankers Investment Trust 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 Bankers Investment 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 Bankers Investment Trust 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 Bankers Investment i.e., Bankers Investment and Costco Wholesale go up and down completely randomly.
Pair Corralation between Bankers Investment and Costco Wholesale
Assuming the 90 days trading horizon Bankers Investment is expected to generate 1.79 times less return on investment than Costco Wholesale. But when comparing it to its historical volatility, Bankers Investment Trust is 1.04 times less risky than Costco Wholesale. It trades about 0.26 of its potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 92,047 in Costco Wholesale Corp on November 7, 2024 and sell it today you would earn a total of 10,259 from holding Costco Wholesale Corp or generate 11.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bankers Investment Trust vs. Costco Wholesale Corp
Performance |
| Timeline |
| Bankers Investment Trust |
| Costco Wholesale Corp |
Bankers Investment and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bankers Investment and Costco Wholesale
The main advantage of trading using opposite Bankers Investment and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankers Investment 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.| Bankers Investment vs. Gamma Communications PLC | Bankers Investment vs. Zoom Video Communications | Bankers Investment vs. Litigation Capital Management | Bankers Investment vs. Aeorema Communications Plc |
| Costco Wholesale vs. Austevoll Seafood ASA | Costco Wholesale vs. Software Circle plc | Costco Wholesale vs. Sligro Food Group | Costco Wholesale vs. Southwest Airlines Co |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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