Correlation Between Costco Wholesale and Science Applications
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Science Applications 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 Science Applications 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 Science Applications International, you can compare the effects of market volatilities on Costco Wholesale and Science Applications 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 Science Applications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Science Applications.
Diversification Opportunities for Costco Wholesale and Science Applications
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Costco and Science is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications 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 Science Applications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Applications has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Science Applications go up and down completely randomly.
Pair Corralation between Costco Wholesale and Science Applications
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.6 times more return on investment than Science Applications. However, Costco Wholesale Corp is 1.67 times less risky than Science Applications. It trades about 0.22 of its potential returns per unit of risk. Science Applications International is currently generating about 0.04 per unit of risk. If you would invest 71,896 in Costco Wholesale Corp on September 4, 2024 and sell it today you would earn a total of 20,324 from holding Costco Wholesale Corp or generate 28.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale Corp vs. Science Applications Internati
Performance |
| Timeline |
| Costco Wholesale Corp |
| Science Applications |
Costco Wholesale and Science Applications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Science Applications
The main advantage of trading using opposite Costco Wholesale and Science Applications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Science Applications 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 Science Applications will offset losses from the drop in Science Applications' long position.| Costco Wholesale vs. Calibre Mining Corp | Costco Wholesale vs. X FAB Silicon Foundries | Costco Wholesale vs. Wayside Technology Group | Costco Wholesale vs. AECOM TECHNOLOGY |
| Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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