Correlation Between Grupo Hotelero and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Grupo Hotelero 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 Grupo Hotelero and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Hotelero Santa and Costco Wholesale, you can compare the effects of market volatilities on Grupo Hotelero 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 Grupo Hotelero with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Hotelero and Costco Wholesale.
Diversification Opportunities for Grupo Hotelero and Costco Wholesale
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grupo and Costco is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Hotelero Santa and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale and Grupo Hotelero 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 Grupo Hotelero Santa 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 Grupo Hotelero i.e., Grupo Hotelero and Costco Wholesale go up and down completely randomly.
Pair Corralation between Grupo Hotelero and Costco Wholesale
Assuming the 90 days trading horizon Grupo Hotelero is expected to generate 3.94 times less return on investment than Costco Wholesale. In addition to that, Grupo Hotelero is 1.24 times more volatile than Costco Wholesale. It trades about 0.03 of its total potential returns per unit of risk. Costco Wholesale is currently generating about 0.16 per unit of volatility. If you would invest 1,277,403 in Costco Wholesale on August 27, 2024 and sell it today you would earn a total of 701,397 from holding Costco Wholesale or generate 54.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Hotelero Santa vs. Costco Wholesale
Performance |
| Timeline |
| Grupo Hotelero Santa |
| Costco Wholesale |
Grupo Hotelero and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Hotelero and Costco Wholesale
The main advantage of trading using opposite Grupo Hotelero and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Hotelero 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.| Grupo Hotelero vs. Taiwan Semiconductor Manufacturing | Grupo Hotelero vs. Alibaba Group Holding | Grupo Hotelero vs. The Select Sector | Grupo Hotelero vs. Promotora y Operadora |
| Costco Wholesale vs. Grupo Carso SAB | Costco Wholesale vs. Ameriprise Financial | Costco Wholesale vs. The Bank of | Costco Wholesale vs. Samsung Electronics Co |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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