Correlation Between Costco Wholesale and EHEALTH
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and EHEALTH 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 EHEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale and EHEALTH, you can compare the effects of market volatilities on Costco Wholesale and EHEALTH 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 EHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and EHEALTH.
Diversification Opportunities for Costco Wholesale and EHEALTH
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Costco and EHEALTH is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH 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 EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and EHEALTH go up and down completely randomly.
Pair Corralation between Costco Wholesale and EHEALTH
Assuming the 90 days horizon Costco Wholesale is expected to generate 0.27 times more return on investment than EHEALTH. However, Costco Wholesale is 3.72 times less risky than EHEALTH. It trades about 0.13 of its potential returns per unit of risk. EHEALTH is currently generating about 0.03 per unit of risk. If you would invest 41,528 in Costco Wholesale on September 12, 2024 and sell it today you would earn a total of 51,492 from holding Costco Wholesale or generate 123.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale vs. EHEALTH
Performance |
| Timeline |
| Costco Wholesale |
| EHEALTH |
Costco Wholesale and EHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and EHEALTH
The main advantage of trading using opposite Costco Wholesale and EHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, EHEALTH 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 EHEALTH will offset losses from the drop in EHEALTH's long position.| Costco Wholesale vs. Canon Marketing Japan | Costco Wholesale vs. TSOGO SUN GAMING | Costco Wholesale vs. Games Workshop Group | Costco Wholesale vs. GAMESTOP |
| EHEALTH vs. PREMIER FOODS | EHEALTH vs. Commonwealth Bank of | EHEALTH vs. ASSOC BR FOODS | EHEALTH vs. Thai Beverage Public |
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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