Correlation Between COSTCO WHOLESALE and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC, you can compare the effects of market volatilities on COSTCO WHOLESALE and XLMedia PLC 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 XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and XLMedia PLC.
Diversification Opportunities for COSTCO WHOLESALE and XLMedia PLC
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between COSTCO and XLMedia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and XLMedia PLC go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and XLMedia PLC
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 0.23 times more return on investment than XLMedia PLC. However, COSTCO WHOLESALE CDR is 4.26 times less risky than XLMedia PLC. It trades about 0.09 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.02 per unit of risk. If you would invest 1,501 in COSTCO WHOLESALE CDR on September 2, 2024 and sell it today you would earn a total of 1,459 from holding COSTCO WHOLESALE CDR or generate 97.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. XLMedia PLC
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| XLMedia PLC |
COSTCO WHOLESALE and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and XLMedia PLC
The main advantage of trading using opposite COSTCO WHOLESALE and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, XLMedia PLC 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| COSTCO WHOLESALE vs. Superior Plus Corp | COSTCO WHOLESALE vs. NMI Holdings | COSTCO WHOLESALE vs. Origin Agritech | COSTCO WHOLESALE vs. SIVERS SEMICONDUCTORS AB |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |