Correlation Between Costco Wholesale and BTG Pactual
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and BTG Pactual 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 BTG Pactual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale and BTG Pactual Logstica, you can compare the effects of market volatilities on Costco Wholesale and BTG Pactual 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 BTG Pactual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and BTG Pactual.
Diversification Opportunities for Costco Wholesale and BTG Pactual
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Costco and BTG is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and BTG Pactual Logstica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTG Pactual Logstica 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 are associated (or correlated) with BTG Pactual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTG Pactual Logstica has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and BTG Pactual go up and down completely randomly.
Pair Corralation between Costco Wholesale and BTG Pactual
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 2.54 times more return on investment than BTG Pactual. However, Costco Wholesale is 2.54 times more volatile than BTG Pactual Logstica. It trades about 0.38 of its potential returns per unit of risk. BTG Pactual Logstica is currently generating about -0.16 per unit of risk. If you would invest 12,838 in Costco Wholesale on September 2, 2024 and sell it today you would earn a total of 1,784 from holding Costco Wholesale or generate 13.9% 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 vs. BTG Pactual Logstica
Performance |
| Timeline |
| Costco Wholesale |
| BTG Pactual Logstica |
Costco Wholesale and BTG Pactual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and BTG Pactual
The main advantage of trading using opposite Costco Wholesale and BTG Pactual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, BTG Pactual 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 BTG Pactual will offset losses from the drop in BTG Pactual's long position.| Costco Wholesale vs. Paycom Software | Costco Wholesale vs. Monster Beverage | Costco Wholesale vs. Livetech da Bahia | Costco Wholesale vs. Technos SA |
| BTG Pactual vs. Plano Plano Desenvolvimento | BTG Pactual vs. Cable One | BTG Pactual vs. ATMA Participaes SA | BTG Pactual vs. British American Tobacco |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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