Correlation Between Costco Wholesale and Converge Technology
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Converge Technology 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 Converge Technology 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 Converge Technology Solutions, you can compare the effects of market volatilities on Costco Wholesale and Converge Technology 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 Converge Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Converge Technology.
Diversification Opportunities for Costco Wholesale and Converge Technology
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and Converge is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Converge Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Technology 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 Converge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Technology has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Converge Technology go up and down completely randomly.
Pair Corralation between Costco Wholesale and Converge Technology
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 1.03 times less return on investment than Converge Technology. But when comparing it to its historical volatility, Costco Wholesale Corp is 2.55 times less risky than Converge Technology. It trades about 0.28 of its potential returns per unit of risk. Converge Technology Solutions is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 315.00 in Converge Technology Solutions on August 28, 2024 and sell it today you would earn a total of 22.00 from holding Converge Technology Solutions or generate 6.98% 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. Converge Technology Solutions
Performance |
| Timeline |
| Costco Wholesale Corp |
| Converge Technology |
Costco Wholesale and Converge Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Converge Technology
The main advantage of trading using opposite Costco Wholesale and Converge Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Converge Technology 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 Converge Technology will offset losses from the drop in Converge Technology's long position.| Costco Wholesale vs. Chatham Rock Phosphate | Costco Wholesale vs. Alaska Energy Metals | Costco Wholesale vs. Elixxer | Costco Wholesale vs. Cielo Waste Solutions |
| Converge Technology vs. Dye Durham | Converge Technology vs. Docebo Inc | Converge Technology vs. Topicus | Converge Technology vs. goeasy |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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