Correlation Between Costco Wholesale and RT Minerals
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and RT Minerals 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 RT Minerals 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 RT Minerals Corp, you can compare the effects of market volatilities on Costco Wholesale and RT Minerals 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 RT Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and RT Minerals.
Diversification Opportunities for Costco Wholesale and RT Minerals
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and RTM is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and RT Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RT Minerals Corp 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 RT Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RT Minerals Corp has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and RT Minerals go up and down completely randomly.
Pair Corralation between Costco Wholesale and RT Minerals
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 14.55 times less return on investment than RT Minerals. But when comparing it to its historical volatility, Costco Wholesale Corp is 38.64 times less risky than RT Minerals. It trades about 0.13 of its potential returns per unit of risk. RT Minerals Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10.00 in RT Minerals Corp on August 29, 2024 and sell it today you would earn a total of 2.00 from holding RT Minerals Corp or generate 20.0% 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. RT Minerals Corp
Performance |
| Timeline |
| Costco Wholesale Corp |
| RT Minerals Corp |
Costco Wholesale and RT Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and RT Minerals
The main advantage of trading using opposite Costco Wholesale and RT Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, RT Minerals 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 RT Minerals will offset losses from the drop in RT Minerals' 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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