Correlation Between Costco Wholesale and Grupo Sports
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Grupo Sports 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 Grupo Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale and Grupo Sports World, you can compare the effects of market volatilities on Costco Wholesale and Grupo Sports 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 Grupo Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Grupo Sports.
Diversification Opportunities for Costco Wholesale and Grupo Sports
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Costco and Grupo is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and Grupo Sports World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Sports World 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 Grupo Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Sports World has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Grupo Sports go up and down completely randomly.
Pair Corralation between Costco Wholesale and Grupo Sports
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 1.45 times more return on investment than Grupo Sports. However, Costco Wholesale is 1.45 times more volatile than Grupo Sports World. It trades about 0.19 of its potential returns per unit of risk. Grupo Sports World is currently generating about -0.04 per unit of risk. If you would invest 1,892,701 in Costco Wholesale on November 4, 2024 and sell it today you would earn a total of 135,599 from holding Costco Wholesale or generate 7.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale vs. Grupo Sports World
Performance |
| Timeline |
| Costco Wholesale |
| Grupo Sports World |
Costco Wholesale and Grupo Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Grupo Sports
The main advantage of trading using opposite Costco Wholesale and Grupo Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Grupo Sports 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 Grupo Sports will offset losses from the drop in Grupo Sports' long position.| Costco Wholesale vs. CVS Health | Costco Wholesale vs. Delta Air Lines | Costco Wholesale vs. The Home Depot | Costco Wholesale vs. Monster Beverage Corp |
| Grupo Sports vs. Ameriprise Financial | Grupo Sports vs. Verizon Communications | Grupo Sports vs. Cognizant Technology Solutions | Grupo Sports vs. Southern Copper |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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