Correlation Between Costco Wholesale and Caseys General
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Caseys General 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 Caseys General 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 Caseys General Stores, you can compare the effects of market volatilities on Costco Wholesale and Caseys General 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 Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Caseys General.
Diversification Opportunities for Costco Wholesale and Caseys General
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Costco and Caseys is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores 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 Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Caseys General go up and down completely randomly.
Pair Corralation between Costco Wholesale and Caseys General
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.77 times more return on investment than Caseys General. However, Costco Wholesale Corp is 1.3 times less risky than Caseys General. It trades about 0.2 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.1 per unit of risk. If you would invest 80,991 in Costco Wholesale Corp on December 3, 2024 and sell it today you would earn a total of 17,369 from holding Costco Wholesale Corp or generate 21.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale Corp vs. Caseys General Stores
Performance |
| Timeline |
| Costco Wholesale Corp |
| Caseys General Stores |
Costco Wholesale and Caseys General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Caseys General
The main advantage of trading using opposite Costco Wholesale and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Caseys General 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 Caseys General will offset losses from the drop in Caseys General's long position.| Costco Wholesale vs. Chengdu PUTIAN Telecommunications | ||
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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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