Correlation Between COSTCO WHOLESALE and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and KENNAMETAL INC 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 KENNAMETAL INC 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 KENNAMETAL INC, you can compare the effects of market volatilities on COSTCO WHOLESALE and KENNAMETAL INC 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 KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and KENNAMETAL INC.
Diversification Opportunities for COSTCO WHOLESALE and KENNAMETAL INC
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between COSTCO and KENNAMETAL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC 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 KENNAMETAL INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENNAMETAL INC has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and KENNAMETAL INC
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 | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. KENNAMETAL INC
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| KENNAMETAL INC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
COSTCO WHOLESALE and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and KENNAMETAL INC
The main advantage of trading using opposite COSTCO WHOLESALE and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, KENNAMETAL INC 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 KENNAMETAL INC will offset losses from the drop in KENNAMETAL INC's long position.| COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Costco Wholesale | COSTCO WHOLESALE vs. Target |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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