Correlation Between Costco Wholesale and Postal Savings
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Postal Savings 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 Postal Savings 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 Postal Savings Bank, you can compare the effects of market volatilities on Costco Wholesale and Postal Savings 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 Postal Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Postal Savings.
Diversification Opportunities for Costco Wholesale and Postal Savings
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Costco and Postal is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank 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 Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Postal Savings go up and down completely randomly.
Pair Corralation between Costco Wholesale and Postal Savings
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.71 times more return on investment than Postal Savings. However, Costco Wholesale Corp is 1.42 times less risky than Postal Savings. It trades about 0.42 of its potential returns per unit of risk. Postal Savings Bank is currently generating about 0.1 per unit of risk. If you would invest 89,452 in Costco Wholesale Corp on November 28, 2024 and sell it today you would earn a total of 10,548 from holding Costco Wholesale Corp or generate 11.79% 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. Postal Savings Bank
Performance |
| Timeline |
| Costco Wholesale Corp |
| Postal Savings Bank |
Costco Wholesale and Postal Savings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Postal Savings
The main advantage of trading using opposite Costco Wholesale and Postal Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Postal Savings 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 Postal Savings will offset losses from the drop in Postal Savings' long position.| Costco Wholesale vs. Hastings Technology Metals | Costco Wholesale vs. NXP Semiconductors NV | Costco Wholesale vs. Computer And Technologies | Costco Wholesale vs. ELMOS SEMICONDUCTOR |
| Postal Savings vs. Ming Le Sports | Postal Savings vs. Chiba Bank | Postal Savings vs. PT Bank Maybank | Postal Savings vs. BW OFFSHORE LTD |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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