Correlation Between GP Investments and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both GP Investments 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 GP Investments and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GP Investments and Costco Wholesale, you can compare the effects of market volatilities on GP Investments 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 GP Investments with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and Costco Wholesale.
Diversification Opportunities for GP Investments and Costco Wholesale
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GPIV33 and Costco is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale and GP Investments 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 GP Investments 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 GP Investments i.e., GP Investments and Costco Wholesale go up and down completely randomly.
Pair Corralation between GP Investments and Costco Wholesale
Assuming the 90 days trading horizon GP Investments is expected to under-perform the Costco Wholesale. In addition to that, GP Investments is 2.17 times more volatile than Costco Wholesale. It trades about -0.17 of its total potential returns per unit of risk. Costco Wholesale is currently generating about 0.23 per unit of volatility. If you would invest 12,109 in Costco Wholesale on August 30, 2024 and sell it today you would earn a total of 2,111 from holding Costco Wholesale or generate 17.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GP Investments vs. Costco Wholesale
Performance |
| Timeline |
| GP Investments |
| Costco Wholesale |
GP Investments and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GP Investments and Costco Wholesale
The main advantage of trading using opposite GP Investments and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Investments 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.| GP Investments vs. Ross Stores | GP Investments vs. Paycom Software | GP Investments vs. MAHLE Metal Leve | GP Investments vs. Bio Techne |
| Costco Wholesale vs. Unity Software | Costco Wholesale vs. Dell Technologies | Costco Wholesale vs. Take Two Interactive Software | Costco Wholesale vs. GP Investments |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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