Correlation Between US Financial and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both US Financial 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 US Financial and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Financial 15 and Costco Wholesale Corp, you can compare the effects of market volatilities on US Financial 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 US Financial with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and Costco Wholesale.
Diversification Opportunities for US Financial and Costco Wholesale
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FTU-PB and Costco is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 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 US Financial 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 US Financial 15 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 US Financial i.e., US Financial and Costco Wholesale go up and down completely randomly.
Pair Corralation between US Financial and Costco Wholesale
Assuming the 90 days trading horizon US Financial is expected to generate 1.59 times less return on investment than Costco Wholesale. In addition to that, US Financial is 2.18 times more volatile than Costco Wholesale Corp. It trades about 0.08 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.27 per unit of volatility. If you would invest 4,136 in Costco Wholesale Corp on August 29, 2024 and sell it today you would earn a total of 325.00 from holding Costco Wholesale Corp or generate 7.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Financial 15 vs. Costco Wholesale Corp
Performance |
| Timeline |
| US Financial 15 |
| Costco Wholesale Corp |
US Financial and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Financial and Costco Wholesale
The main advantage of trading using opposite US Financial and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Financial 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.| US Financial vs. North American Financial | US Financial vs. Prime Dividend Corp | US Financial vs. Canadian Life Companies | US Financial vs. Financial 15 Split |
| Costco Wholesale vs. CVW CleanTech | Costco Wholesale vs. Ramp Metals | Costco Wholesale vs. Firan Technology Group | Costco Wholesale vs. Oculus VisionTech |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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