Correlation Between Costco Wholesale and Cleveland Cliffs
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Cleveland Cliffs 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 Costco Wholesale and Cleveland Cliffs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale and Cleveland Cliffs, you can compare the effects of market volatilities on Costco Wholesale and Cleveland Cliffs 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 Costco Wholesale with a short position of Cleveland Cliffs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Cleveland Cliffs.
Diversification Opportunities for Costco Wholesale and Cleveland Cliffs
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Costco and Cleveland is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and Cleveland Cliffs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleveland Cliffs and Costco Wholesale 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 Costco Wholesale are associated (or correlated) with Cleveland Cliffs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleveland Cliffs has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Cleveland Cliffs go up and down completely randomly.
Pair Corralation between Costco Wholesale and Cleveland Cliffs
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 0.31 times more return on investment than Cleveland Cliffs. However, Costco Wholesale is 3.18 times less risky than Cleveland Cliffs. It trades about 0.29 of its potential returns per unit of risk. Cleveland Cliffs is currently generating about 0.0 per unit of risk. If you would invest 1,713,808 in Costco Wholesale on September 13, 2024 and sell it today you would earn a total of 311,345 from holding Costco Wholesale or generate 18.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Costco Wholesale vs. Cleveland Cliffs
Performance |
| Timeline |
| Costco Wholesale |
| Cleveland Cliffs |
Costco Wholesale and Cleveland Cliffs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Cleveland Cliffs
The main advantage of trading using opposite Costco Wholesale and Cleveland Cliffs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Cleveland Cliffs 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 Cleveland Cliffs will offset losses from the drop in Cleveland Cliffs' long position.| Costco Wholesale vs. CVS Health | Costco Wholesale vs. Hoteles City Express | Costco Wholesale vs. Southwest Airlines | Costco Wholesale vs. KB Home |
| Cleveland Cliffs vs. Compaa Minera Autln | Cleveland Cliffs vs. McEwen Mining | Cleveland Cliffs vs. The Select Sector | Cleveland Cliffs vs. Promotora y Operadora |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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