Correlation Between Costco Wholesale and Target
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Target 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 Target 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 Target, you can compare the effects of market volatilities on Costco Wholesale and Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Target.
Diversification Opportunities for Costco Wholesale and Target
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and Target is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Target go up and down completely randomly.
Pair Corralation between Costco Wholesale and Target
Given the investment horizon of 90 days Costco Wholesale Corp is expected to generate 0.67 times more return on investment than Target. However, Costco Wholesale Corp is 1.5 times less risky than Target. It trades about 0.58 of its potential returns per unit of risk. Target is currently generating about -0.1 per unit of risk. If you would invest 94,215 in Costco Wholesale Corp on November 18, 2024 and sell it today you would earn a total of 12,970 from holding Costco Wholesale Corp or generate 13.77% 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. Target
Performance |
| Timeline |
| Costco Wholesale Corp |
| Target |
Costco Wholesale and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Target
The main advantage of trading using opposite Costco Wholesale and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Costco Wholesale vs. Walmart | Costco Wholesale vs. Dollar Tree | Costco Wholesale vs. BJs Wholesale Club | Costco Wholesale vs. Target |
| Target vs. BJs Wholesale Club | Target vs. Dollar General | Target vs. Grocery Outlet Holding | Target vs. Kroger Company |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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