Correlation Between COSTCO WHOLESALE and ASX
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and ASX 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 ASX 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 ASX Limited, you can compare the effects of market volatilities on COSTCO WHOLESALE and ASX 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 ASX. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and ASX.
Diversification Opportunities for COSTCO WHOLESALE and ASX
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between COSTCO and ASX is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and ASX Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASX Limited 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 ASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASX Limited has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and ASX go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and ASX
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 2.5 times more return on investment than ASX. However, COSTCO WHOLESALE is 2.5 times more volatile than ASX Limited. It trades about 0.01 of its potential returns per unit of risk. ASX Limited is currently generating about -0.21 per unit of risk. If you would invest 2,880 in COSTCO WHOLESALE CDR on October 26, 2024 and sell it today you would earn a total of 0.00 from holding COSTCO WHOLESALE CDR or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. ASX Limited
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| ASX Limited |
COSTCO WHOLESALE and ASX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and ASX
The main advantage of trading using opposite COSTCO WHOLESALE and ASX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, ASX 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 ASX will offset losses from the drop in ASX's long position.| COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Costco Wholesale | COSTCO WHOLESALE vs. Target |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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