Correlation Between Costco Wholesale and NESTE OYJ
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and NESTE OYJ 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 NESTE OYJ 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 NESTE OYJ UNSPADR, you can compare the effects of market volatilities on Costco Wholesale and NESTE OYJ 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 NESTE OYJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and NESTE OYJ.
Diversification Opportunities for Costco Wholesale and NESTE OYJ
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costco and NESTE is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and NESTE OYJ UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESTE OYJ UNSPADR 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 NESTE OYJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESTE OYJ UNSPADR has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and NESTE OYJ go up and down completely randomly.
Pair Corralation between Costco Wholesale and NESTE OYJ
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 11.7 times less return on investment than NESTE OYJ. But when comparing it to its historical volatility, Costco Wholesale Corp is 3.55 times less risky than NESTE OYJ. It trades about 0.08 of its potential returns per unit of risk. NESTE OYJ UNSPADR is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 540.00 in NESTE OYJ UNSPADR on October 24, 2024 and sell it today you would earn a total of 95.00 from holding NESTE OYJ UNSPADR or generate 17.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Costco Wholesale Corp vs. NESTE OYJ UNSPADR
Performance |
| Timeline |
| Costco Wholesale Corp |
| NESTE OYJ UNSPADR |
Costco Wholesale and NESTE OYJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and NESTE OYJ
The main advantage of trading using opposite Costco Wholesale and NESTE OYJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, NESTE OYJ 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 NESTE OYJ will offset losses from the drop in NESTE OYJ's long position.| Costco Wholesale vs. Apple Inc | Costco Wholesale vs. Apple Inc | Costco Wholesale vs. Apple Inc | Costco Wholesale vs. Apple Inc |
| NESTE OYJ vs. Costco Wholesale Corp | NESTE OYJ vs. Burlington Stores | NESTE OYJ vs. Boyd Gaming | NESTE OYJ vs. PICKN PAY STORES |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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