Correlation Between Costco Wholesale and Dream Office
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Dream Office 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 Dream Office 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 Dream Office Real, you can compare the effects of market volatilities on Costco Wholesale and Dream Office 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 Dream Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Dream Office.
Diversification Opportunities for Costco Wholesale and Dream Office
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and Dream is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Dream Office Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Office Real 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 Dream Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Office Real has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Dream Office go up and down completely randomly.
Pair Corralation between Costco Wholesale and Dream Office
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.79 times more return on investment than Dream Office. However, Costco Wholesale Corp is 1.26 times less risky than Dream Office. It trades about 0.31 of its potential returns per unit of risk. Dream Office Real is currently generating about -0.44 per unit of risk. If you would invest 4,136 in Costco Wholesale Corp on August 29, 2024 and sell it today you would earn a total of 369.00 from holding Costco Wholesale Corp or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale Corp vs. Dream Office Real
Performance |
| Timeline |
| Costco Wholesale Corp |
| Dream Office Real |
Costco Wholesale and Dream Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Dream Office
The main advantage of trading using opposite Costco Wholesale and Dream Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Dream Office 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 Dream Office will offset losses from the drop in Dream Office's long position.| Costco Wholesale vs. CVW CleanTech | Costco Wholesale vs. Ramp Metals | Costco Wholesale vs. Firan Technology Group | Costco Wholesale vs. Oculus VisionTech |
| Dream Office vs. Artis Real Estate | Dream Office vs. Boardwalk Real Estate | Dream Office vs. Allied Properties Real | Dream Office vs. HR Real Estate |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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