Correlation Between Cable One and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Cable One 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 Cable One and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cable One and Costco Wholesale, you can compare the effects of market volatilities on Cable One 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 Cable One with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Costco Wholesale.
Diversification Opportunities for Cable One and Costco Wholesale
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cable and Costco is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale and Cable One 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 Cable One 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 Cable One i.e., Cable One and Costco Wholesale go up and down completely randomly.
Pair Corralation between Cable One and Costco Wholesale
Assuming the 90 days trading horizon Cable One is expected to under-perform the Costco Wholesale. In addition to that, Cable One is 2.17 times more volatile than Costco Wholesale. It trades about -0.03 of its total potential returns per unit of risk. Costco Wholesale is currently generating about 0.19 per unit of volatility. If you would invest 6,711 in Costco Wholesale on September 3, 2024 and sell it today you would earn a total of 8,021 from holding Costco Wholesale or generate 119.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 59.35% |
| Values | Daily Returns |
Cable One vs. Costco Wholesale
Performance |
| Timeline |
| Cable One |
| Costco Wholesale |
Cable One and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cable One and Costco Wholesale
The main advantage of trading using opposite Cable One and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One 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.The idea behind Cable One and Costco Wholesale pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Costco Wholesale vs. Take Two Interactive Software | Costco Wholesale vs. Unity Software | Costco Wholesale vs. Fidelity National Information | Costco Wholesale vs. Dell Technologies |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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