Correlation Between Costco Wholesale and AEGEAN AIRLINES
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and AEGEAN AIRLINES 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 AEGEAN AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale Corp and AEGEAN AIRLINES, you can compare the effects of market volatilities on Costco Wholesale and AEGEAN AIRLINES 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 AEGEAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and AEGEAN AIRLINES.
Diversification Opportunities for Costco Wholesale and AEGEAN AIRLINES
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and AEGEAN is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and AEGEAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEGEAN AIRLINES 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 Corp are associated (or correlated) with AEGEAN AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEGEAN AIRLINES has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and AEGEAN AIRLINES go up and down completely randomly.
Pair Corralation between Costco Wholesale and AEGEAN AIRLINES
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to under-perform the AEGEAN AIRLINES. But the stock apears to be less risky and, when comparing its historical volatility, Costco Wholesale Corp is 1.08 times less risky than AEGEAN AIRLINES. The stock trades about -0.39 of its potential returns per unit of risk. The AEGEAN AIRLINES is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,018 in AEGEAN AIRLINES on October 17, 2024 and sell it today you would lose (11.00) from holding AEGEAN AIRLINES or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale Corp vs. AEGEAN AIRLINES
Performance |
| Timeline |
| Costco Wholesale Corp |
| AEGEAN AIRLINES |
Costco Wholesale and AEGEAN AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and AEGEAN AIRLINES
The main advantage of trading using opposite Costco Wholesale and AEGEAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, AEGEAN AIRLINES 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 AEGEAN AIRLINES will offset losses from the drop in AEGEAN AIRLINES's long position.| Costco Wholesale vs. CITY OFFICE REIT | Costco Wholesale vs. alstria office REIT AG | Costco Wholesale vs. American Eagle Outfitters | Costco Wholesale vs. COFCO Joycome Foods |
| AEGEAN AIRLINES vs. National Retail Properties | AEGEAN AIRLINES vs. FAST RETAIL ADR | AEGEAN AIRLINES vs. Endeavour Mining PLC | AEGEAN AIRLINES vs. Costco Wholesale Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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