Correlation Between COSTCO WHOLESALE and ULTRA CLEAN
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and ULTRA CLEAN 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 ULTRA CLEAN 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 ULTRA CLEAN HLDGS, you can compare the effects of market volatilities on COSTCO WHOLESALE and ULTRA CLEAN 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 ULTRA CLEAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and ULTRA CLEAN.
Diversification Opportunities for COSTCO WHOLESALE and ULTRA CLEAN
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between COSTCO and ULTRA is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and ULTRA CLEAN HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ULTRA CLEAN HLDGS 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 ULTRA CLEAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ULTRA CLEAN HLDGS has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and ULTRA CLEAN go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and ULTRA CLEAN
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 0.56 times more return on investment than ULTRA CLEAN. However, COSTCO WHOLESALE CDR is 1.8 times less risky than ULTRA CLEAN. It trades about 0.11 of its potential returns per unit of risk. ULTRA CLEAN HLDGS is currently generating about 0.02 per unit of risk. If you would invest 1,675 in COSTCO WHOLESALE CDR on August 28, 2024 and sell it today you would earn a total of 1,305 from holding COSTCO WHOLESALE CDR or generate 77.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. ULTRA CLEAN HLDGS
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| ULTRA CLEAN HLDGS |
COSTCO WHOLESALE and ULTRA CLEAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and ULTRA CLEAN
The main advantage of trading using opposite COSTCO WHOLESALE and ULTRA CLEAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, ULTRA CLEAN 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 ULTRA CLEAN will offset losses from the drop in ULTRA CLEAN's long position.| COSTCO WHOLESALE vs. Superior Plus Corp | COSTCO WHOLESALE vs. NMI Holdings | COSTCO WHOLESALE vs. Origin Agritech | COSTCO WHOLESALE vs. SIVERS SEMICONDUCTORS AB |
| ULTRA CLEAN vs. GREENX METALS LTD | ULTRA CLEAN vs. Gaztransport Technigaz SA | ULTRA CLEAN vs. TITANIUM TRANSPORTGROUP | ULTRA CLEAN vs. FIREWEED METALS P |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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