Correlation Between COSTCO WHOLESALE and Air Lease
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and Air Lease 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 Air Lease 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 Air Lease, you can compare the effects of market volatilities on COSTCO WHOLESALE and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and Air Lease.
Diversification Opportunities for COSTCO WHOLESALE and Air Lease
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between COSTCO and Air is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and Air Lease go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and Air Lease
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 0.81 times more return on investment than Air Lease. However, COSTCO WHOLESALE CDR is 1.23 times less risky than Air Lease. It trades about 0.11 of its potential returns per unit of risk. Air Lease is currently generating about 0.02 per unit of risk. If you would invest 2,226 in COSTCO WHOLESALE CDR on September 3, 2024 and sell it today you would earn a total of 734.00 from holding COSTCO WHOLESALE CDR or generate 32.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. Air Lease
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| Air Lease |
COSTCO WHOLESALE and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and Air Lease
The main advantage of trading using opposite COSTCO WHOLESALE and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Superior Plus Corp | COSTCO WHOLESALE vs. NMI Holdings | COSTCO WHOLESALE vs. Origin Agritech |
| Air Lease vs. Air Transport Services | Air Lease vs. VIRGIN WINES UK | Air Lease vs. TEXAS ROADHOUSE | Air Lease vs. Broadcom |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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