Correlation Between Costco Wholesale and Leafly Holdings
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Leafly Holdings 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 Leafly Holdings 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 Leafly Holdings, you can compare the effects of market volatilities on Costco Wholesale and Leafly Holdings 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 Leafly Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Leafly Holdings.
Diversification Opportunities for Costco Wholesale and Leafly Holdings
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and Leafly is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Leafly Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leafly Holdings 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 Leafly Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leafly Holdings has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Leafly Holdings go up and down completely randomly.
Pair Corralation between Costco Wholesale and Leafly Holdings
Given the investment horizon of 90 days Costco Wholesale Corp is expected to generate 0.15 times more return on investment than Leafly Holdings. However, Costco Wholesale Corp is 6.85 times less risky than Leafly Holdings. It trades about 0.13 of its potential returns per unit of risk. Leafly Holdings is currently generating about -0.02 per unit of risk. If you would invest 46,421 in Costco Wholesale Corp on August 27, 2024 and sell it today you would earn a total of 49,980 from holding Costco Wholesale Corp or generate 107.67% 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. Leafly Holdings
Performance |
| Timeline |
| Costco Wholesale Corp |
| Leafly Holdings |
Costco Wholesale and Leafly Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Leafly Holdings
The main advantage of trading using opposite Costco Wholesale and Leafly Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Leafly Holdings 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 Leafly Holdings will offset losses from the drop in Leafly Holdings' long position.| Costco Wholesale vs. Walmart | Costco Wholesale vs. Dollar Tree | Costco Wholesale vs. BJs Wholesale Club | Costco Wholesale vs. Target |
| Leafly Holdings vs. Kiaro Holdings Corp | Leafly Holdings vs. Allstar Health Brands | Leafly Holdings vs. Aquagold International | Leafly Holdings vs. Morningstar Unconstrained Allocation |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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