Correlation Between COSTCO WHOLESALE and Retail Estates
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and Retail Estates 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 Retail Estates 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 Retail Estates NV, you can compare the effects of market volatilities on COSTCO WHOLESALE and Retail Estates 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 Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and Retail Estates.
Diversification Opportunities for COSTCO WHOLESALE and Retail Estates
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between COSTCO and Retail is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV 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 Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and Retail Estates go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and Retail Estates
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 1.49 times more return on investment than Retail Estates. However, COSTCO WHOLESALE is 1.49 times more volatile than Retail Estates NV. It trades about 0.13 of its potential returns per unit of risk. Retail Estates NV is currently generating about 0.0 per unit of risk. If you would invest 1,771 in COSTCO WHOLESALE CDR on August 29, 2024 and sell it today you would earn a total of 1,229 from holding COSTCO WHOLESALE CDR or generate 69.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. Retail Estates NV
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| Retail Estates NV |
COSTCO WHOLESALE and Retail Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and Retail Estates
The main advantage of trading using opposite COSTCO WHOLESALE and Retail Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, Retail Estates 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 Retail Estates will offset losses from the drop in Retail Estates' long position.| COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Costco Wholesale | COSTCO WHOLESALE vs. Target |
| Retail Estates vs. DEVRY EDUCATION GRP | Retail Estates vs. MAGIC SOFTWARE ENTR | Retail Estates vs. EMBARK EDUCATION LTD | Retail Estates vs. GALENA MINING LTD |
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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