Correlation Between Costco Wholesale and Enghouse Systems
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Enghouse Systems 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 Enghouse Systems 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 Enghouse Systems, you can compare the effects of market volatilities on Costco Wholesale and Enghouse Systems 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 Enghouse Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Enghouse Systems.
Diversification Opportunities for Costco Wholesale and Enghouse Systems
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and Enghouse is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Enghouse Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enghouse Systems 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 Enghouse Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enghouse Systems has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Enghouse Systems go up and down completely randomly.
Pair Corralation between Costco Wholesale and Enghouse Systems
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.79 times more return on investment than Enghouse Systems. However, Costco Wholesale Corp is 1.26 times less risky than Enghouse Systems. It trades about 0.38 of its potential returns per unit of risk. Enghouse Systems is currently generating about -0.1 per unit of risk. If you would invest 4,076 in Costco Wholesale Corp on August 31, 2024 and sell it today you would earn a total of 435.00 from holding Costco Wholesale Corp or generate 10.67% 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. Enghouse Systems
Performance |
| Timeline |
| Costco Wholesale Corp |
| Enghouse Systems |
Costco Wholesale and Enghouse Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Enghouse Systems
The main advantage of trading using opposite Costco Wholesale and Enghouse Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Enghouse Systems 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 Enghouse Systems will offset losses from the drop in Enghouse Systems' long position.| Costco Wholesale vs. Berkshire Hathaway CDR | Costco Wholesale vs. JPMorgan Chase Co | Costco Wholesale vs. Bank of America | Costco Wholesale vs. Alphabet Inc CDR |
| Enghouse Systems vs. Kinaxis | Enghouse Systems vs. Open Text Corp | Enghouse Systems vs. Descartes Systems Group | Enghouse Systems vs. Constellation Software |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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