Correlation Between Costco Wholesale and Hospital Mater
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Hospital Mater 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 Hospital Mater into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale and Hospital Mater Dei, you can compare the effects of market volatilities on Costco Wholesale and Hospital Mater 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 Hospital Mater. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Hospital Mater.
Diversification Opportunities for Costco Wholesale and Hospital Mater
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and Hospital is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and Hospital Mater Dei in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hospital Mater Dei 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 Hospital Mater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hospital Mater Dei has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Hospital Mater go up and down completely randomly.
Pair Corralation between Costco Wholesale and Hospital Mater
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 0.69 times more return on investment than Hospital Mater. However, Costco Wholesale is 1.44 times less risky than Hospital Mater. It trades about 0.3 of its potential returns per unit of risk. Hospital Mater Dei is currently generating about 0.02 per unit of risk. If you would invest 12,694 in Costco Wholesale on August 27, 2024 and sell it today you would earn a total of 1,264 from holding Costco Wholesale or generate 9.96% 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. Hospital Mater Dei
Performance |
| Timeline |
| Costco Wholesale |
| Hospital Mater Dei |
Costco Wholesale and Hospital Mater Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Hospital Mater
The main advantage of trading using opposite Costco Wholesale and Hospital Mater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Hospital Mater 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 Hospital Mater will offset losses from the drop in Hospital Mater's long position.| Costco Wholesale vs. Fras le SA | Costco Wholesale vs. Clave Indices De | Costco Wholesale vs. BTG Pactual Logstica | Costco Wholesale vs. Telefonaktiebolaget LM Ericsson |
| Hospital Mater vs. Fras le SA | Hospital Mater vs. Western Digital | Hospital Mater vs. Clave Indices De | Hospital Mater vs. BTG Pactual Logstica |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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