Correlation Between Costco Wholesale and Rocky Mountain
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Rocky Mountain 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 Rocky Mountain 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 Rocky Mountain Liquor, you can compare the effects of market volatilities on Costco Wholesale and Rocky Mountain 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 Rocky Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Rocky Mountain.
Diversification Opportunities for Costco Wholesale and Rocky Mountain
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Costco and Rocky is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Rocky Mountain Liquor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Mountain Liquor 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 Rocky Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Mountain Liquor has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Rocky Mountain go up and down completely randomly.
Pair Corralation between Costco Wholesale and Rocky Mountain
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.21 times more return on investment than Rocky Mountain. However, Costco Wholesale Corp is 4.85 times less risky than Rocky Mountain. It trades about -0.42 of its potential returns per unit of risk. Rocky Mountain Liquor is currently generating about -0.1 per unit of risk. If you would invest 4,606 in Costco Wholesale Corp on October 11, 2024 and sell it today you would lose (316.00) from holding Costco Wholesale Corp or give up 6.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Costco Wholesale Corp vs. Rocky Mountain Liquor
Performance |
| Timeline |
| Costco Wholesale Corp |
| Rocky Mountain Liquor |
Costco Wholesale and Rocky Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Rocky Mountain
The main advantage of trading using opposite Costco Wholesale and Rocky Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Rocky Mountain 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 Rocky Mountain will offset losses from the drop in Rocky Mountain's long position.| Costco Wholesale vs. Sun Peak Metals | Costco Wholesale vs. Oncolytics Biotech | Costco Wholesale vs. Birchtech Corp | Costco Wholesale vs. Micron Technology, |
| Rocky Mountain vs. Constellation Software | Rocky Mountain vs. Ramp Metals | Rocky Mountain vs. Pace Metals | Rocky Mountain vs. Renoworks Software |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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