Correlation Between Carmat SA and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Carmat SA and Costco Wholesale 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 Carmat SA and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carmat SA and Costco Wholesale Corp, you can compare the effects of market volatilities on Carmat SA and Costco Wholesale 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 Carmat SA with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carmat SA and Costco Wholesale.
Diversification Opportunities for Carmat SA and Costco Wholesale
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Carmat and Costco is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Carmat SA and Costco Wholesale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale Corp and Carmat SA 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 Carmat SA are associated (or correlated) with Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale Corp has no effect on the direction of Carmat SA i.e., Carmat SA and Costco Wholesale go up and down completely randomly.
Pair Corralation between Carmat SA and Costco Wholesale
Assuming the 90 days horizon Carmat SA is expected to under-perform the Costco Wholesale. In addition to that, Carmat SA is 5.36 times more volatile than Costco Wholesale Corp. It trades about -0.04 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.15 per unit of volatility. If you would invest 45,781 in Costco Wholesale Corp on August 31, 2024 and sell it today you would earn a total of 45,719 from holding Costco Wholesale Corp or generate 99.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carmat SA vs. Costco Wholesale Corp
Performance |
| Timeline |
| Carmat SA |
| Costco Wholesale Corp |
Carmat SA and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carmat SA and Costco Wholesale
The main advantage of trading using opposite Carmat SA and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carmat SA position performs unexpectedly, Costco Wholesale 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.| Carmat SA vs. China Communications Services | Carmat SA vs. Vulcan Materials | Carmat SA vs. NEWELL RUBBERMAID | Carmat SA vs. Liberty Broadband |
| Costco Wholesale vs. SMA Solar Technology | Costco Wholesale vs. Insteel Industries | Costco Wholesale vs. X Fab Silicon | Costco Wholesale vs. United States Steel |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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