Correlation Between Gap and COSTCO WHOLESALE
Can any of the company-specific risk be diversified away by investing in both Gap 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 Gap and COSTCO WHOLESALE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gap and COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on Gap 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 Gap with a short position of COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap and COSTCO WHOLESALE.
Diversification Opportunities for Gap and COSTCO WHOLESALE
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gap and COSTCO is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding The Gap and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR and Gap 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 The Gap 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 CDR has no effect on the direction of Gap i.e., Gap and COSTCO WHOLESALE go up and down completely randomly.
Pair Corralation between Gap and COSTCO WHOLESALE
Assuming the 90 days horizon The Gap is expected to generate 2.44 times more return on investment than COSTCO WHOLESALE. However, Gap is 2.44 times more volatile than COSTCO WHOLESALE CDR. It trades about 0.09 of its potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.12 per unit of risk. If you would invest 813.00 in The Gap on September 12, 2024 and sell it today you would earn a total of 1,618 from holding The Gap or generate 199.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gap vs. COSTCO WHOLESALE CDR
Performance |
| Timeline |
| Gap |
| COSTCO WHOLESALE CDR |
Gap and COSTCO WHOLESALE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gap and COSTCO WHOLESALE
The main advantage of trading using opposite Gap and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap 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.| Gap vs. BJs Wholesale Club | Gap vs. SPORT LISBOA E | Gap vs. National Retail Properties | Gap vs. Retail Estates NV |
| COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Costco Wholesale | COSTCO WHOLESALE vs. Dollarama | COSTCO WHOLESALE vs. Superior Plus Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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