Correlation Between COSTCO WHOLESALE and Prosus NV
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and Prosus NV 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 Prosus NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COSTCO WHOLESALE CDR and Prosus NV, you can compare the effects of market volatilities on COSTCO WHOLESALE and Prosus NV 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 Prosus NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and Prosus NV.
Diversification Opportunities for COSTCO WHOLESALE and Prosus NV
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between COSTCO and Prosus is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV 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 CDR are associated (or correlated) with Prosus NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosus NV has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and Prosus NV go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and Prosus NV
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 0.84 times more return on investment than Prosus NV. However, COSTCO WHOLESALE CDR is 1.19 times less risky than Prosus NV. It trades about 0.12 of its potential returns per unit of risk. Prosus NV is currently generating about 0.05 per unit of risk. If you would invest 1,656 in COSTCO WHOLESALE CDR on September 12, 2024 and sell it today you would earn a total of 1,444 from holding COSTCO WHOLESALE CDR or generate 87.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. Prosus NV
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| Prosus NV |
COSTCO WHOLESALE and Prosus NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and Prosus NV
The main advantage of trading using opposite COSTCO WHOLESALE and Prosus NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, Prosus NV 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 Prosus NV will offset losses from the drop in Prosus NV's long position.| COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Costco Wholesale | COSTCO WHOLESALE vs. Dollarama | COSTCO WHOLESALE vs. Superior Plus Corp |
| Prosus NV vs. COSTCO WHOLESALE CDR | Prosus NV vs. QURATE RETAIL INC | Prosus NV vs. Penn National Gaming | Prosus NV vs. International Game Technology |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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