Correlation Between COSTCO WHOLESALE and Welltower
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and Welltower 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 Welltower 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 Welltower, you can compare the effects of market volatilities on COSTCO WHOLESALE and Welltower 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 Welltower. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and Welltower.
Diversification Opportunities for COSTCO WHOLESALE and Welltower
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between COSTCO and Welltower is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower 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 Welltower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltower has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and Welltower go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and Welltower
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 1.19 times more return on investment than Welltower. However, COSTCO WHOLESALE is 1.19 times more volatile than Welltower. It trades about 0.26 of its potential returns per unit of risk. Welltower is currently generating about 0.29 per unit of risk. If you would invest 2,715 in COSTCO WHOLESALE CDR on August 29, 2024 and sell it today you would earn a total of 285.00 from holding COSTCO WHOLESALE CDR or generate 10.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. Welltower
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| Welltower |
COSTCO WHOLESALE and Welltower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and Welltower
The main advantage of trading using opposite COSTCO WHOLESALE and Welltower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, Welltower 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 Welltower will offset losses from the drop in Welltower's long position.| COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Costco Wholesale | COSTCO WHOLESALE vs. Target |
| Welltower vs. Retail Estates NV | Welltower vs. COSTCO WHOLESALE CDR | Welltower vs. Ross Stores | Welltower vs. SALESFORCE INC CDR |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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