Correlation Between Costco Wholesale and Advent Wireless
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Advent Wireless 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 Advent Wireless 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 Advent Wireless, you can compare the effects of market volatilities on Costco Wholesale and Advent Wireless 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 Advent Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Advent Wireless.
Diversification Opportunities for Costco Wholesale and Advent Wireless
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Costco and Advent is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Advent Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Wireless 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 Advent Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Wireless has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Advent Wireless go up and down completely randomly.
Pair Corralation between Costco Wholesale and Advent Wireless
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 3.17 times less return on investment than Advent Wireless. But when comparing it to its historical volatility, Costco Wholesale Corp is 4.7 times less risky than Advent Wireless. It trades about 0.31 of its potential returns per unit of risk. Advent Wireless is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 65.00 in Advent Wireless on August 29, 2024 and sell it today you would earn a total of 18.00 from holding Advent Wireless or generate 27.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale Corp vs. Advent Wireless
Performance |
| Timeline |
| Costco Wholesale Corp |
| Advent Wireless |
Costco Wholesale and Advent Wireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Advent Wireless
The main advantage of trading using opposite Costco Wholesale and Advent Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Advent Wireless 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 Advent Wireless will offset losses from the drop in Advent Wireless' long position.| Costco Wholesale vs. CVW CleanTech | Costco Wholesale vs. Ramp Metals | Costco Wholesale vs. Firan Technology Group | Costco Wholesale vs. Oculus VisionTech |
| Advent Wireless vs. Partners Value Investments | Advent Wireless vs. Canlan Ice Sports | Advent Wireless vs. iSign Media Solutions | Advent Wireless vs. Champion Gaming Group |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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