Correlation Between Target and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Target 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 Target and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target and Costco Wholesale, you can compare the effects of market volatilities on Target 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 Target with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and Costco Wholesale.
Diversification Opportunities for Target and Costco Wholesale
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Target and Costco is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Target and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale and Target 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 Target 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 has no effect on the direction of Target i.e., Target and Costco Wholesale go up and down completely randomly.
Pair Corralation between Target and Costco Wholesale
Assuming the 90 days horizon Target is expected to generate 1.72 times less return on investment than Costco Wholesale. In addition to that, Target is 1.28 times more volatile than Costco Wholesale. It trades about 0.09 of its total potential returns per unit of risk. Costco Wholesale is currently generating about 0.19 per unit of volatility. If you would invest 88,610 in Costco Wholesale on November 1, 2024 and sell it today you would earn a total of 5,720 from holding Costco Wholesale or generate 6.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target vs. Costco Wholesale
Performance |
| Timeline |
| Target |
| Costco Wholesale |
Target and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target and Costco Wholesale
The main advantage of trading using opposite Target and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target 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.The idea behind Target and Costco Wholesale pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Costco Wholesale vs. Walmart | Costco Wholesale vs. Walmart | Costco Wholesale vs. Target | Costco Wholesale vs. Wal Mart de Mxico |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |