Correlation Between COSTCO WHOLESALE and United Overseas
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and United Overseas 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 United Overseas 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 United Overseas Bank, you can compare the effects of market volatilities on COSTCO WHOLESALE and United Overseas 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 United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and United Overseas.
Diversification Opportunities for COSTCO WHOLESALE and United Overseas
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between COSTCO and United is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and United Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Overseas Bank 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 United Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Overseas Bank has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and United Overseas go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and United Overseas
Assuming the 90 days trading horizon COSTCO WHOLESALE is expected to generate 1.81 times less return on investment than United Overseas. In addition to that, COSTCO WHOLESALE is 1.26 times more volatile than United Overseas Bank. It trades about 0.08 of its total potential returns per unit of risk. United Overseas Bank is currently generating about 0.19 per unit of volatility. If you would invest 1,964 in United Overseas Bank on November 3, 2024 and sell it today you would earn a total of 711.00 from holding United Overseas Bank or generate 36.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. United Overseas Bank
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| United Overseas Bank |
COSTCO WHOLESALE and United Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and United Overseas
The main advantage of trading using opposite COSTCO WHOLESALE and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, United Overseas 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 United Overseas will offset losses from the drop in United Overseas' long position.| COSTCO WHOLESALE vs. Southwest Airlines Co | COSTCO WHOLESALE vs. LOANDEPOT INC A | COSTCO WHOLESALE vs. Warner Music Group | COSTCO WHOLESALE vs. MOVIE GAMES SA |
| United Overseas vs. Fast Retailing Co | United Overseas vs. Caseys General Stores | United Overseas vs. Iridium Communications | United Overseas vs. Cairo Communication SpA |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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