Correlation Between Costco Wholesale and N1WS34
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and N1WS34 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 N1WS34 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale and N1WS34, you can compare the effects of market volatilities on Costco Wholesale and N1WS34 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 N1WS34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and N1WS34.
Diversification Opportunities for Costco Wholesale and N1WS34
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Costco and N1WS34 is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and N1WS34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N1WS34 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 N1WS34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N1WS34 has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and N1WS34 go up and down completely randomly.
Pair Corralation between Costco Wholesale and N1WS34
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 0.85 times more return on investment than N1WS34. However, Costco Wholesale is 1.18 times less risky than N1WS34. It trades about 0.13 of its potential returns per unit of risk. N1WS34 is currently generating about 0.08 per unit of risk. If you would invest 6,031 in Costco Wholesale on September 20, 2024 and sell it today you would earn a total of 9,120 from holding Costco Wholesale or generate 151.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.0% |
| Values | Daily Returns |
Costco Wholesale vs. N1WS34
Performance |
| Timeline |
| Costco Wholesale |
| N1WS34 |
Costco Wholesale and N1WS34 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and N1WS34
The main advantage of trading using opposite Costco Wholesale and N1WS34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, N1WS34 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 N1WS34 will offset losses from the drop in N1WS34's long position.| Costco Wholesale vs. Fundo Investimento Imobiliario | Costco Wholesale vs. LESTE FDO INV | Costco Wholesale vs. Fras le SA | Costco Wholesale vs. Western Digital |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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