Correlation Between Costco Wholesale and Great West
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Great West 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 Great West 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 Great West Lifeco, you can compare the effects of market volatilities on Costco Wholesale and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Great West.
Diversification Opportunities for Costco Wholesale and Great West
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and Great is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Great West Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifeco 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifeco has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Great West go up and down completely randomly.
Pair Corralation between Costco Wholesale and Great West
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to under-perform the Great West. In addition to that, Costco Wholesale is 1.83 times more volatile than Great West Lifeco. It trades about -0.05 of its total potential returns per unit of risk. Great West Lifeco is currently generating about 0.27 per unit of volatility. If you would invest 1,900 in Great West Lifeco on October 21, 2024 and sell it today you would earn a total of 69.00 from holding Great West Lifeco or generate 3.63% 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. Great West Lifeco
Performance |
| Timeline |
| Costco Wholesale Corp |
| Great West Lifeco |
Costco Wholesale and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Great West
The main advantage of trading using opposite Costco Wholesale and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.| Costco Wholesale vs. Earth Alive Clean | Costco Wholesale vs. Rogers Communications | Costco Wholesale vs. Altair Resources | Costco Wholesale vs. Quipt Home Medical |
| Great West vs. Power Financial Corp | Great West vs. Precipitate Gold Corp | Great West vs. Marimaca Copper Corp | Great West vs. Air Canada |
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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