Correlation Between COSTCO WHOLESALE and Gap
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and Gap 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 Gap 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 The Gap, you can compare the effects of market volatilities on COSTCO WHOLESALE and Gap 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 Gap. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and Gap.
Diversification Opportunities for COSTCO WHOLESALE and Gap
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between COSTCO and Gap is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and The Gap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap 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 Gap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and Gap go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and Gap
Assuming the 90 days trading horizon COSTCO WHOLESALE is expected to generate 1.91 times less return on investment than Gap. But when comparing it to its historical volatility, COSTCO WHOLESALE CDR is 2.44 times less risky than Gap. It trades about 0.12 of its potential returns per unit of risk. The Gap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 813.00 in The Gap on September 12, 2024 and sell it today you would earn a total of 1,618 from holding The Gap or generate 199.02% 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. The Gap
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| Gap |
COSTCO WHOLESALE and Gap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and Gap
The main advantage of trading using opposite COSTCO WHOLESALE and Gap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, Gap 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 Gap will offset losses from the drop in Gap's long position.| COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Costco Wholesale | COSTCO WHOLESALE vs. Dollarama | COSTCO WHOLESALE vs. Superior Plus Corp |
| Gap vs. BJs Wholesale Club | Gap vs. SPORT LISBOA E | Gap vs. National Retail Properties | Gap vs. Retail Estates NV |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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