Correlation Between COSTCO WHOLESALE and Metro AG
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and Metro AG 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 Metro AG 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 Metro AG, you can compare the effects of market volatilities on COSTCO WHOLESALE and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and Metro AG.
Diversification Opportunities for COSTCO WHOLESALE and Metro AG
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between COSTCO and Metro is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and Metro AG go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and Metro AG
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 0.88 times more return on investment than Metro AG. However, COSTCO WHOLESALE CDR is 1.14 times less risky than Metro AG. It trades about 0.09 of its potential returns per unit of risk. Metro AG is currently generating about -0.11 per unit of risk. If you would invest 2,655 in COSTCO WHOLESALE CDR on November 1, 2024 and sell it today you would earn a total of 305.00 from holding COSTCO WHOLESALE CDR or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. Metro AG
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| Metro AG |
COSTCO WHOLESALE and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and Metro AG
The main advantage of trading using opposite COSTCO WHOLESALE and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| COSTCO WHOLESALE vs. Gaming and Leisure | COSTCO WHOLESALE vs. Prosiebensat 1 Media | COSTCO WHOLESALE vs. Townsquare Media | COSTCO WHOLESALE vs. PLAYWAY SA ZY 10 |
| Metro AG vs. Carsales | Metro AG vs. MUTUIONLINE | Metro AG vs. Focus Home Interactive | Metro AG vs. American Homes 4 |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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