Correlation Between Costco Wholesale and Apple
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale Corp and Apple Inc CDR, you can compare the effects of market volatilities on Costco Wholesale and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Apple.
Diversification Opportunities for Costco Wholesale and Apple
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Costco and Apple is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR 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 Corp are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Apple go up and down completely randomly.
Pair Corralation between Costco Wholesale and Apple
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.81 times more return on investment than Apple. However, Costco Wholesale Corp is 1.24 times less risky than Apple. It trades about 0.09 of its potential returns per unit of risk. Apple Inc CDR is currently generating about 0.05 per unit of risk. If you would invest 4,089 in Costco Wholesale Corp on November 2, 2024 and sell it today you would earn a total of 431.00 from holding Costco Wholesale Corp or generate 10.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale Corp vs. Apple Inc CDR
Performance |
| Timeline |
| Costco Wholesale Corp |
| Apple Inc CDR |
Costco Wholesale and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Apple
The main advantage of trading using opposite Costco Wholesale and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Costco Wholesale vs. Bank of Nova | Costco Wholesale vs. Postmedia Network Canada | Costco Wholesale vs. Income Financial Trust | Costco Wholesale vs. Manulife Financial Corp |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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