Correlation Between Costco Wholesale and Companhia Siderrgica
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Companhia Siderrgica 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 Companhia Siderrgica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale and Companhia Siderrgica Nacional, you can compare the effects of market volatilities on Costco Wholesale and Companhia Siderrgica 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 Companhia Siderrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Companhia Siderrgica.
Diversification Opportunities for Costco Wholesale and Companhia Siderrgica
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and Companhia is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica 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 Companhia Siderrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderrgica has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Companhia Siderrgica go up and down completely randomly.
Pair Corralation between Costco Wholesale and Companhia Siderrgica
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 0.55 times more return on investment than Companhia Siderrgica. However, Costco Wholesale is 1.81 times less risky than Companhia Siderrgica. It trades about 0.12 of its potential returns per unit of risk. Companhia Siderrgica Nacional is currently generating about -0.01 per unit of risk. If you would invest 916,022 in Costco Wholesale on September 2, 2024 and sell it today you would earn a total of 1,064,478 from holding Costco Wholesale or generate 116.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale vs. Companhia Siderrgica Nacional
Performance |
| Timeline |
| Costco Wholesale |
| Companhia Siderrgica |
Costco Wholesale and Companhia Siderrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Companhia Siderrgica
The main advantage of trading using opposite Costco Wholesale and Companhia Siderrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Companhia Siderrgica 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 Companhia Siderrgica will offset losses from the drop in Companhia Siderrgica's long position.| Costco Wholesale vs. Hoteles City Express | Costco Wholesale vs. Monster Beverage Corp | Costco Wholesale vs. Grupo Hotelero Santa | Costco Wholesale vs. FibraHotel |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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