Correlation Between Costco Wholesale and Pfizer
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Pfizer 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 Pfizer 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 Pfizer Inc CDR, you can compare the effects of market volatilities on Costco Wholesale and Pfizer 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 Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Pfizer.
Diversification Opportunities for Costco Wholesale and Pfizer
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Costco and Pfizer is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Pfizer Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc CDR 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 Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc CDR has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Pfizer go up and down completely randomly.
Pair Corralation between Costco Wholesale and Pfizer
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.76 times more return on investment than Pfizer. However, Costco Wholesale Corp is 1.31 times less risky than Pfizer. It trades about 0.08 of its potential returns per unit of risk. Pfizer Inc CDR is currently generating about -0.08 per unit of risk. If you would invest 4,136 in Costco Wholesale Corp on October 26, 2024 and sell it today you would earn a total of 222.00 from holding Costco Wholesale Corp or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale Corp vs. Pfizer Inc CDR
Performance |
| Timeline |
| Costco Wholesale Corp |
| Pfizer Inc CDR |
Costco Wholesale and Pfizer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Pfizer
The main advantage of trading using opposite Costco Wholesale and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Pfizer 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 Pfizer will offset losses from the drop in Pfizer's long position.| Costco Wholesale vs. Quorum Information Technologies | Costco Wholesale vs. Rogers Communications | Costco Wholesale vs. NeXGold Mining Corp | Costco Wholesale vs. VIP Entertainment Technologies |
| Pfizer vs. Canlan Ice Sports | Pfizer vs. Broadcom | Pfizer vs. TGS Esports | Pfizer vs. Storage Vault 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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