Correlation Between Costco Wholesale and Big Rock
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Big Rock 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 Big Rock 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 Big Rock Brewery, you can compare the effects of market volatilities on Costco Wholesale and Big Rock 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 Big Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Big Rock.
Diversification Opportunities for Costco Wholesale and Big Rock
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and Big is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Big Rock Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Rock Brewery 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 Big Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Rock Brewery has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Big Rock go up and down completely randomly.
Pair Corralation between Costco Wholesale and Big Rock
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 5.09 times less return on investment than Big Rock. But when comparing it to its historical volatility, Costco Wholesale Corp is 9.1 times less risky than Big Rock. It trades about 0.15 of its potential returns per unit of risk. Big Rock Brewery is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Big Rock Brewery on September 12, 2024 and sell it today you would earn a total of 96.00 from holding Big Rock Brewery or generate 505.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale Corp vs. Big Rock Brewery
Performance |
| Timeline |
| Costco Wholesale Corp |
| Big Rock Brewery |
Costco Wholesale and Big Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Big Rock
The main advantage of trading using opposite Costco Wholesale and Big Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Big Rock 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 Big Rock will offset losses from the drop in Big Rock's long position.| Costco Wholesale vs. Gamehost | Costco Wholesale vs. Olympia Financial Group | Costco Wholesale vs. Champion Gaming Group | Costco Wholesale vs. Bragg Gaming Group |
| Big Rock vs. iShares Canadian HYBrid | Big Rock vs. Solar Alliance Energy | Big Rock vs. PHN Multi Style All Cap | Big Rock vs. EcoSynthetix |
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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