Correlation Between COSTCO WHOLESALE and WILLIS LEASE
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and WILLIS LEASE 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 WILLIS LEASE 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 WILLIS LEASE FIN, you can compare the effects of market volatilities on COSTCO WHOLESALE and WILLIS LEASE 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 WILLIS LEASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and WILLIS LEASE.
Diversification Opportunities for COSTCO WHOLESALE and WILLIS LEASE
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between COSTCO and WILLIS is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and WILLIS LEASE FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WILLIS LEASE FIN 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 WILLIS LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WILLIS LEASE FIN has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and WILLIS LEASE go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and WILLIS LEASE
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 0.53 times more return on investment than WILLIS LEASE. However, COSTCO WHOLESALE CDR is 1.87 times less risky than WILLIS LEASE. It trades about -0.05 of its potential returns per unit of risk. WILLIS LEASE FIN is currently generating about -0.04 per unit of risk. If you would invest 2,960 in COSTCO WHOLESALE CDR on October 30, 2024 and sell it today you would lose (100.00) from holding COSTCO WHOLESALE CDR or give up 3.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. WILLIS LEASE FIN
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| WILLIS LEASE FIN |
COSTCO WHOLESALE and WILLIS LEASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and WILLIS LEASE
The main advantage of trading using opposite COSTCO WHOLESALE and WILLIS LEASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, WILLIS LEASE 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 WILLIS LEASE will offset losses from the drop in WILLIS LEASE's long position.| COSTCO WHOLESALE vs. Pembina Pipeline Corp | COSTCO WHOLESALE vs. PKSHA TECHNOLOGY INC | COSTCO WHOLESALE vs. Casio Computer CoLtd | COSTCO WHOLESALE vs. Cleanaway Waste Management |
| WILLIS LEASE vs. Easy Software AG | WILLIS LEASE vs. UNIQA INSURANCE GR | WILLIS LEASE vs. X FAB Silicon Foundries | WILLIS LEASE vs. Insurance Australia Group |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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