Correlation Between Costco Wholesale and Cogeco Communications
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Cogeco Communications 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 Cogeco Communications 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 Cogeco Communications, you can compare the effects of market volatilities on Costco Wholesale and Cogeco Communications 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 Cogeco Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Cogeco Communications.
Diversification Opportunities for Costco Wholesale and Cogeco Communications
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Costco and Cogeco is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications 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 Cogeco Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogeco Communications has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Cogeco Communications go up and down completely randomly.
Pair Corralation between Costco Wholesale and Cogeco Communications
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.81 times more return on investment than Cogeco Communications. However, Costco Wholesale Corp is 1.24 times less risky than Cogeco Communications. It trades about 0.18 of its potential returns per unit of risk. Cogeco Communications is currently generating about 0.08 per unit of risk. If you would invest 2,535 in Costco Wholesale Corp on August 25, 2024 and sell it today you would earn a total of 1,935 from holding Costco Wholesale Corp or generate 76.33% 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 Corp vs. Cogeco Communications
Performance |
| Timeline |
| Costco Wholesale Corp |
| Cogeco Communications |
Costco Wholesale and Cogeco Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Cogeco Communications
The main advantage of trading using opposite Costco Wholesale and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Cogeco Communications 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 Cogeco Communications will offset losses from the drop in Cogeco Communications' long position.| Costco Wholesale vs. Chatham Rock Phosphate | Costco Wholesale vs. Alaska Energy Metals | Costco Wholesale vs. Elixxer | Costco Wholesale vs. Cielo Waste Solutions |
| Cogeco Communications vs. Cogeco Inc | Cogeco Communications vs. Quebecor | Cogeco Communications vs. Transcontinental | Cogeco Communications vs. Stella Jones |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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