Correlation Between Costco Wholesale and STRAYER EDUCATION
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and STRAYER EDUCATION 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 STRAYER EDUCATION 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 STRAYER EDUCATION, you can compare the effects of market volatilities on Costco Wholesale and STRAYER EDUCATION 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 STRAYER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and STRAYER EDUCATION.
Diversification Opportunities for Costco Wholesale and STRAYER EDUCATION
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Costco and STRAYER is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and STRAYER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAYER EDUCATION 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 STRAYER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAYER EDUCATION has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and STRAYER EDUCATION go up and down completely randomly.
Pair Corralation between Costco Wholesale and STRAYER EDUCATION
Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.78 times more return on investment than STRAYER EDUCATION. However, Costco Wholesale Corp is 1.28 times less risky than STRAYER EDUCATION. It trades about 0.17 of its potential returns per unit of risk. STRAYER EDUCATION is currently generating about 0.09 per unit of risk. If you would invest 79,984 in Costco Wholesale Corp on September 3, 2024 and sell it today you would earn a total of 11,606 from holding Costco Wholesale Corp or generate 14.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale Corp vs. STRAYER EDUCATION
Performance |
| Timeline |
| Costco Wholesale Corp |
| STRAYER EDUCATION |
Costco Wholesale and STRAYER EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and STRAYER EDUCATION
The main advantage of trading using opposite Costco Wholesale and STRAYER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, STRAYER EDUCATION 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 STRAYER EDUCATION will offset losses from the drop in STRAYER EDUCATION's long position.| Costco Wholesale vs. TOTAL GABON | Costco Wholesale vs. Walgreens Boots Alliance | Costco Wholesale vs. Peak Resources Limited |
| STRAYER EDUCATION vs. United Rentals | STRAYER EDUCATION vs. Caseys General Stores | STRAYER EDUCATION vs. Zijin Mining Group | STRAYER EDUCATION vs. Costco Wholesale Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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