Correlation Between Costco Wholesale and Almacenes Xito
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Almacenes Xito 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 Almacenes Xito 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 Almacenes xito SA, you can compare the effects of market volatilities on Costco Wholesale and Almacenes Xito 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 Almacenes Xito. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Almacenes Xito.
Diversification Opportunities for Costco Wholesale and Almacenes Xito
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Costco and Almacenes is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Almacenes xito SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Almacenes xito SA 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 Almacenes Xito. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Almacenes xito SA has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Almacenes Xito go up and down completely randomly.
Pair Corralation between Costco Wholesale and Almacenes Xito
Given the investment horizon of 90 days Costco Wholesale Corp is expected to generate 0.7 times more return on investment than Almacenes Xito. However, Costco Wholesale Corp is 1.43 times less risky than Almacenes Xito. It trades about 0.34 of its potential returns per unit of risk. Almacenes xito SA is currently generating about -0.22 per unit of risk. If you would invest 87,792 in Costco Wholesale Corp on August 31, 2024 and sell it today you would earn a total of 8,363 from holding Costco Wholesale Corp or generate 9.53% 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. Almacenes xito SA
Performance |
| Timeline |
| Costco Wholesale Corp |
| Almacenes xito SA |
Costco Wholesale and Almacenes Xito Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Almacenes Xito
The main advantage of trading using opposite Costco Wholesale and Almacenes Xito positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Almacenes Xito 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 Almacenes Xito will offset losses from the drop in Almacenes Xito's long position.| Costco Wholesale vs. Walmart | Costco Wholesale vs. Dollar Tree | Costco Wholesale vs. BJs Wholesale Club | Costco Wholesale vs. Target |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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