Correlation Between COSTCO WHOLESALE and X-FAB Silicon
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and X-FAB Silicon 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 X-FAB Silicon 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on COSTCO WHOLESALE and X-FAB Silicon 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 X-FAB Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and X-FAB Silicon.
Diversification Opportunities for COSTCO WHOLESALE and X-FAB Silicon
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between COSTCO and X-FAB is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X-FAB Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and X-FAB Silicon go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and X-FAB Silicon
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 0.64 times more return on investment than X-FAB Silicon. However, COSTCO WHOLESALE CDR is 1.57 times less risky than X-FAB Silicon. It trades about 0.09 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.02 per unit of risk. If you would invest 1,506 in COSTCO WHOLESALE CDR on September 4, 2024 and sell it today you would earn a total of 1,454 from holding COSTCO WHOLESALE CDR or generate 96.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. X FAB Silicon Foundries
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| X FAB Silicon |
COSTCO WHOLESALE and X-FAB Silicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and X-FAB Silicon
The main advantage of trading using opposite COSTCO WHOLESALE and X-FAB Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, X-FAB Silicon 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 X-FAB Silicon will offset losses from the drop in X-FAB Silicon's long position.| COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Superior Plus Corp | COSTCO WHOLESALE vs. NMI Holdings | COSTCO WHOLESALE vs. Origin Agritech |
| X-FAB Silicon vs. Suntory Beverage Food | X-FAB Silicon vs. SMA Solar Technology | X-FAB Silicon vs. Microchip Technology Incorporated | X-FAB Silicon vs. Micron Technology |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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