Correlation Between COSTCO WHOLESALE and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and FuelCell Energy 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 FuelCell Energy 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 FuelCell Energy, you can compare the effects of market volatilities on COSTCO WHOLESALE and FuelCell Energy 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 FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and FuelCell Energy.
Diversification Opportunities for COSTCO WHOLESALE and FuelCell Energy
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between COSTCO and FuelCell is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and FuelCell Energy go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and FuelCell Energy
Assuming the 90 days trading horizon COSTCO WHOLESALE is expected to generate 13.75 times less return on investment than FuelCell Energy. But when comparing it to its historical volatility, COSTCO WHOLESALE CDR is 6.5 times less risky than FuelCell Energy. It trades about 0.05 of its potential returns per unit of risk. FuelCell Energy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 930.00 in FuelCell Energy on October 12, 2024 and sell it today you would earn a total of 336.00 from holding FuelCell Energy or generate 36.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.67% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. FuelCell Energy
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| FuelCell Energy |
COSTCO WHOLESALE and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and FuelCell Energy
The main advantage of trading using opposite COSTCO WHOLESALE and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, FuelCell Energy 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.| COSTCO WHOLESALE vs. NTT DATA | COSTCO WHOLESALE vs. Linedata Services SA | COSTCO WHOLESALE vs. Thai Beverage Public | COSTCO WHOLESALE vs. SILVER BULLET DATA |
| FuelCell Energy vs. Delta Electronics Public | FuelCell Energy vs. Superior Plus Corp | FuelCell Energy vs. NMI Holdings | FuelCell Energy 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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