Correlation Between Costco Wholesale and Glencore Plc
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Glencore Plc 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 Glencore Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale and Glencore plc, you can compare the effects of market volatilities on Costco Wholesale and Glencore Plc 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 Glencore Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Glencore Plc.
Diversification Opportunities for Costco Wholesale and Glencore Plc
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Costco and Glencore is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and Glencore plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore plc 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 Glencore Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glencore plc has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Glencore Plc go up and down completely randomly.
Pair Corralation between Costco Wholesale and Glencore Plc
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 11.78 times more return on investment than Glencore Plc. However, Costco Wholesale is 11.78 times more volatile than Glencore plc. It trades about 0.14 of its potential returns per unit of risk. Glencore plc is currently generating about 0.09 per unit of risk. If you would invest 1,546,143 in Costco Wholesale on September 5, 2024 and sell it today you would earn a total of 433,857 from holding Costco Wholesale or generate 28.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale vs. Glencore plc
Performance |
| Timeline |
| Costco Wholesale |
| Glencore plc |
Costco Wholesale and Glencore Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Glencore Plc
The main advantage of trading using opposite Costco Wholesale and Glencore Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Glencore Plc 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 Glencore Plc will offset losses from the drop in Glencore Plc's long position.| Costco Wholesale vs. Deutsche Bank Aktiengesellschaft | Costco Wholesale vs. Hoteles City Express | Costco Wholesale vs. FIBRA Storage | Costco Wholesale vs. Grupo Sports World |
| Glencore Plc vs. Genworth Financial | Glencore Plc vs. Capital One Financial | Glencore Plc vs. Applied Materials | Glencore Plc vs. UnitedHealth Group Incorporated |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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