Correlation Between Costco Wholesale and HF FOODS
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and HF FOODS 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 HF FOODS 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 HF FOODS GRP, you can compare the effects of market volatilities on Costco Wholesale and HF FOODS 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 HF FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and HF FOODS.
Diversification Opportunities for Costco Wholesale and HF FOODS
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Costco and 3GX is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and HF FOODS GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF FOODS GRP 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 HF FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF FOODS GRP has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and HF FOODS go up and down completely randomly.
Pair Corralation between Costco Wholesale and HF FOODS
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.42 times more return on investment than HF FOODS. However, Costco Wholesale Corp is 2.36 times less risky than HF FOODS. It trades about 0.28 of its potential returns per unit of risk. HF FOODS GRP is currently generating about -0.33 per unit of risk. If you would invest 89,030 in Costco Wholesale Corp on November 5, 2024 and sell it today you would earn a total of 5,910 from holding Costco Wholesale Corp or generate 6.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale Corp vs. HF FOODS GRP
Performance |
| Timeline |
| Costco Wholesale Corp |
| HF FOODS GRP |
Costco Wholesale and HF FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and HF FOODS
The main advantage of trading using opposite Costco Wholesale and HF FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, HF FOODS 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 HF FOODS will offset losses from the drop in HF FOODS's long position.| Costco Wholesale vs. East Africa Metals | Costco Wholesale vs. Molson Coors Beverage | Costco Wholesale vs. Air Transport Services | Costco Wholesale vs. PATTIES FOODS |
| HF FOODS vs. Prosiebensat 1 Media | HF FOODS vs. RCS MediaGroup SpA | HF FOODS vs. DISTRICT METALS | HF FOODS vs. GigaMedia |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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