Correlation Between Costco Wholesale and Information Services
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Information Services 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 Information Services 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 Information Services, you can compare the effects of market volatilities on Costco Wholesale and Information Services 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 Information Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Information Services.
Diversification Opportunities for Costco Wholesale and Information Services
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Costco and Information is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Information Services go up and down completely randomly.
Pair Corralation between Costco Wholesale and Information Services
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.95 times more return on investment than Information Services. However, Costco Wholesale Corp is 1.05 times less risky than Information Services. It trades about 0.07 of its potential returns per unit of risk. Information Services is currently generating about 0.0 per unit of risk. If you would invest 4,156 in Costco Wholesale Corp on October 14, 2024 and sell it today you would earn a total of 182.00 from holding Costco Wholesale Corp or generate 4.38% 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. Information Services
Performance |
| Timeline |
| Costco Wholesale Corp |
| Information Services |
Costco Wholesale and Information Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Information Services
The main advantage of trading using opposite Costco Wholesale and Information Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Information Services 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 Information Services will offset losses from the drop in Information Services' long position.| Costco Wholesale vs. WELL Health Technologies | Costco Wholesale vs. Canlan Ice Sports | Costco Wholesale vs. Jamieson Wellness | Costco Wholesale vs. Evertz Technologies Limited |
| Information Services vs. Costco Wholesale Corp | Information Services vs. Mako Mining Corp | Information Services vs. Verizon Communications CDR | Information Services vs. Cogeco Communications |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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