Correlation Between Global X and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and Costco Wholesale, you can compare the effects of market volatilities on Global X 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 Global X with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Costco Wholesale.
Diversification Opportunities for Global X and Costco Wholesale
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Costco is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale and Global X 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 Global X Funds 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 Global X i.e., Global X and Costco Wholesale go up and down completely randomly.
Pair Corralation between Global X and Costco Wholesale
Assuming the 90 days trading horizon Global X is expected to generate 1.56 times less return on investment than Costco Wholesale. But when comparing it to its historical volatility, Global X Funds is 1.11 times less risky than Costco Wholesale. It trades about 0.08 of its potential returns per unit of risk. Costco Wholesale is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,503 in Costco Wholesale on October 27, 2024 and sell it today you would earn a total of 7,811 from holding Costco Wholesale or generate 120.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Funds vs. Costco Wholesale
Performance |
| Timeline |
| Global X Funds |
| Costco Wholesale |
Global X and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Costco Wholesale
The main advantage of trading using opposite Global X and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. Zoom Video Communications | Global X vs. Nordon Indstrias Metalrgicas | Global X vs. Marfrig Global Foods | Global X vs. American Airlines Group |
| Costco Wholesale vs. Liberty Broadband | Costco Wholesale vs. Zoom Video Communications | Costco Wholesale vs. Chunghwa Telecom Co, | Costco Wholesale vs. Melco Resorts Entertainment |
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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