Correlation Between Costco Wholesale and Comcast
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Comcast 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 Comcast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale and Comcast, you can compare the effects of market volatilities on Costco Wholesale and Comcast 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 Comcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Comcast.
Diversification Opportunities for Costco Wholesale and Comcast
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Costco and Comcast is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and Comcast in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comcast 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 Comcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comcast has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Comcast go up and down completely randomly.
Pair Corralation between Costco Wholesale and Comcast
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 0.87 times more return on investment than Comcast. However, Costco Wholesale is 1.16 times less risky than Comcast. It trades about 0.41 of its potential returns per unit of risk. Comcast is currently generating about 0.07 per unit of risk. If you would invest 12,727 in Costco Wholesale on September 1, 2024 and sell it today you would earn a total of 1,895 from holding Costco Wholesale or generate 14.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Costco Wholesale vs. Comcast
Performance |
| Timeline |
| Costco Wholesale |
| Comcast |
Costco Wholesale and Comcast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Comcast
The main advantage of trading using opposite Costco Wholesale and Comcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Comcast 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 Comcast will offset losses from the drop in Comcast's long position.| Costco Wholesale vs. Walmart | Costco Wholesale vs. Fras le SA | Costco Wholesale vs. Energisa SA | Costco Wholesale vs. Clave Indices De |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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