Correlation Between Costco Wholesale and Middle Island
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Middle Island 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 Middle Island 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 Middle Island Resources, you can compare the effects of market volatilities on Costco Wholesale and Middle Island 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 Middle Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Middle Island.
Diversification Opportunities for Costco Wholesale and Middle Island
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and Middle is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Middle Island Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middle Island Resources 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 Middle Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middle Island Resources has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Middle Island go up and down completely randomly.
Pair Corralation between Costco Wholesale and Middle Island
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 196.16 times less return on investment than Middle Island. But when comparing it to its historical volatility, Costco Wholesale Corp is 70.67 times less risky than Middle Island. It trades about 0.07 of its potential returns per unit of risk. Middle Island Resources is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 0.40 in Middle Island Resources on October 25, 2024 and sell it today you would earn a total of 0.05 from holding Middle Island Resources or generate 12.5% 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. Middle Island Resources
Performance |
| Timeline |
| Costco Wholesale Corp |
| Middle Island Resources |
Costco Wholesale and Middle Island Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and Middle Island
The main advantage of trading using opposite Costco Wholesale and Middle Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Middle Island 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 Middle Island will offset losses from the drop in Middle Island's long position.| Costco Wholesale vs. Clean Energy Fuels | Costco Wholesale vs. National Retail Properties | Costco Wholesale vs. HEALTHSTREAM | Costco Wholesale vs. CLOVER HEALTH INV |
| Middle Island vs. PKSHA TECHNOLOGY INC | Middle Island vs. Sunny Optical Technology | Middle Island vs. ARISTOCRAT LEISURE | Middle Island vs. Aristocrat Leisure Limited |
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 CEOs Directory module to screen CEOs from public companies around the world.
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