Correlation Between COSTCO WHOLESALE and MARKET VECTR
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and MARKET VECTR 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 MARKET VECTR 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 MARKET VECTR RETAIL, you can compare the effects of market volatilities on COSTCO WHOLESALE and MARKET VECTR 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 MARKET VECTR. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and MARKET VECTR.
Diversification Opportunities for COSTCO WHOLESALE and MARKET VECTR
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between COSTCO and MARKET is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and MARKET VECTR RETAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARKET VECTR RETAIL 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 MARKET VECTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARKET VECTR RETAIL has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and MARKET VECTR go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and MARKET VECTR
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to under-perform the MARKET VECTR. In addition to that, COSTCO WHOLESALE is 1.72 times more volatile than MARKET VECTR RETAIL. It trades about -0.49 of its total potential returns per unit of risk. MARKET VECTR RETAIL is currently generating about -0.34 per unit of volatility. If you would invest 22,720 in MARKET VECTR RETAIL on October 12, 2024 and sell it today you would lose (790.00) from holding MARKET VECTR RETAIL or give up 3.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. MARKET VECTR RETAIL
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| MARKET VECTR RETAIL |
COSTCO WHOLESALE and MARKET VECTR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and MARKET VECTR
The main advantage of trading using opposite COSTCO WHOLESALE and MARKET VECTR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, MARKET VECTR 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 MARKET VECTR will offset losses from the drop in MARKET VECTR's long position.| COSTCO WHOLESALE vs. NTT DATA | COSTCO WHOLESALE vs. Linedata Services SA | COSTCO WHOLESALE vs. Thai Beverage Public | COSTCO WHOLESALE vs. SILVER BULLET DATA |
| MARKET VECTR vs. FIH MOBILE | MARKET VECTR vs. China Resources Beer | MARKET VECTR vs. MOLSON RS BEVERAGE | MARKET VECTR vs. Geely Automobile Holdings |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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