Correlation Between Costco Wholesale and CVW CleanTech
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and CVW CleanTech 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 CVW CleanTech 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 CVW CleanTech, you can compare the effects of market volatilities on Costco Wholesale and CVW CleanTech 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 CVW CleanTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and CVW CleanTech.
Diversification Opportunities for Costco Wholesale and CVW CleanTech
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Costco and CVW is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech 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 CVW CleanTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CleanTech has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and CVW CleanTech go up and down completely randomly.
Pair Corralation between Costco Wholesale and CVW CleanTech
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.66 times more return on investment than CVW CleanTech. However, Costco Wholesale Corp is 1.51 times less risky than CVW CleanTech. It trades about 0.4 of its potential returns per unit of risk. CVW CleanTech is currently generating about 0.15 per unit of risk. If you would invest 4,059 in Costco Wholesale Corp on September 1, 2024 and sell it today you would earn a total of 459.00 from holding Costco Wholesale Corp or generate 11.31% 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. CVW CleanTech
Performance |
| Timeline |
| Costco Wholesale Corp |
| CVW CleanTech |
Costco Wholesale and CVW CleanTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and CVW CleanTech
The main advantage of trading using opposite Costco Wholesale and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, CVW CleanTech 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 CVW CleanTech will offset losses from the drop in CVW CleanTech's long position.| Costco Wholesale vs. Amazon CDR | Costco Wholesale vs. Berkshire Hathaway CDR | Costco Wholesale vs. UnitedHealth Group CDR | Costco Wholesale vs. Apple Inc CDR |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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