Correlation Between Costco Wholesale and T-MOBILE
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and T-MOBILE 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 T-MOBILE 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 T MOBILE INCDL 00001, you can compare the effects of market volatilities on Costco Wholesale and T-MOBILE 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 T-MOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and T-MOBILE.
Diversification Opportunities for Costco Wholesale and T-MOBILE
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Costco and T-MOBILE is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and T MOBILE INCDL 00001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T MOBILE INCDL 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 T-MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T MOBILE INCDL has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and T-MOBILE go up and down completely randomly.
Pair Corralation between Costco Wholesale and T-MOBILE
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 1.05 times less return on investment than T-MOBILE. But when comparing it to its historical volatility, Costco Wholesale Corp is 1.22 times less risky than T-MOBILE. It trades about 0.18 of its potential returns per unit of risk. T MOBILE INCDL 00001 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 16,867 in T MOBILE INCDL 00001 on November 3, 2024 and sell it today you would earn a total of 5,598 from holding T MOBILE INCDL 00001 or generate 33.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Costco Wholesale Corp vs. T MOBILE INCDL 00001
Performance |
| Timeline |
| Costco Wholesale Corp |
| T MOBILE INCDL |
Costco Wholesale and T-MOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costco Wholesale and T-MOBILE
The main advantage of trading using opposite Costco Wholesale and T-MOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, T-MOBILE 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 T-MOBILE will offset losses from the drop in T-MOBILE's long position.| Costco Wholesale vs. GALENA MINING LTD | Costco Wholesale vs. GREENX METALS LTD | Costco Wholesale vs. SLR Investment Corp | Costco Wholesale vs. SERI INDUSTRIAL EO |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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