Correlation Between Costco Wholesale and Great Wes
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Great Wes 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 Wes 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 Wes 515, you can compare the effects of market volatilities on Costco Wholesale and Great Wes 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 Wes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Great Wes.
Diversification Opportunities for Costco Wholesale and Great Wes
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and Great is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Great Wes 515 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Wes 515 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 Wes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Wes 515 has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Great Wes go up and down completely randomly.
Pair Corralation between Costco Wholesale and Great Wes
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 2.27 times more return on investment than Great Wes. However, Costco Wholesale is 2.27 times more volatile than Great Wes 515. It trades about 0.2 of its potential returns per unit of risk. Great Wes 515 is currently generating about -0.2 per unit of risk. If you would invest 4,119 in Costco Wholesale Corp on August 28, 2024 and sell it today you would earn a total of 386.00 from holding Costco Wholesale Corp or generate 9.37% 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 Wes 515
Performance |
| Timeline |
| Costco Wholesale Corp |
| Great Wes 515 |
Costco Wholesale and Great Wes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Great Wes
The main advantage of trading using opposite Costco Wholesale and Great Wes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Great Wes 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 Wes will offset losses from the drop in Great Wes' long position.| Costco Wholesale vs. Maple Leaf Foods | Costco Wholesale vs. Falcon Energy Materials | Costco Wholesale vs. MTY Food Group | Costco Wholesale vs. Goodfood Market Corp |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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