Correlation Between Costco Wholesale and DEUTSCHE BOERSE
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and DEUTSCHE BOERSE 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 DEUTSCHE BOERSE 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 DEUTSCHE BOERSE ADR, you can compare the effects of market volatilities on Costco Wholesale and DEUTSCHE BOERSE 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 DEUTSCHE BOERSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and DEUTSCHE BOERSE.
Diversification Opportunities for Costco Wholesale and DEUTSCHE BOERSE
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Costco and DEUTSCHE is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and DEUTSCHE BOERSE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE BOERSE ADR 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 DEUTSCHE BOERSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE BOERSE ADR has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and DEUTSCHE BOERSE go up and down completely randomly.
Pair Corralation between Costco Wholesale and DEUTSCHE BOERSE
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 1.17 times more return on investment than DEUTSCHE BOERSE. However, Costco Wholesale is 1.17 times more volatile than DEUTSCHE BOERSE ADR. It trades about 0.32 of its potential returns per unit of risk. DEUTSCHE BOERSE ADR is currently generating about 0.2 per unit of risk. If you would invest 87,760 in Costco Wholesale Corp on September 12, 2024 and sell it today you would earn a total of 7,960 from holding Costco Wholesale Corp or generate 9.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale Corp vs. DEUTSCHE BOERSE ADR
Performance |
| Timeline |
| Costco Wholesale Corp |
| DEUTSCHE BOERSE ADR |
Costco Wholesale and DEUTSCHE BOERSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and DEUTSCHE BOERSE
The main advantage of trading using opposite Costco Wholesale and DEUTSCHE BOERSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, DEUTSCHE BOERSE 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 DEUTSCHE BOERSE will offset losses from the drop in DEUTSCHE BOERSE's long position.| Costco Wholesale vs. PennyMac Mortgage Investment | Costco Wholesale vs. Singapore Airlines Limited | Costco Wholesale vs. Aegean Airlines SA | Costco Wholesale vs. Southwest Airlines Co |
| DEUTSCHE BOERSE vs. AGF Management Limited | DEUTSCHE BOERSE vs. Meli Hotels International | DEUTSCHE BOERSE vs. Dalata Hotel Group | DEUTSCHE BOERSE vs. Coor Service Management |
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 Stocks Directory module to find actively traded stocks across global markets.
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