Correlation Between RETAIL FOOD and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both RETAIL FOOD 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 RETAIL FOOD and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RETAIL FOOD GROUP and Costco Wholesale Corp, you can compare the effects of market volatilities on RETAIL FOOD 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 RETAIL FOOD with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and Costco Wholesale.
Diversification Opportunities for RETAIL FOOD and Costco Wholesale
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RETAIL and Costco is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP 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 RETAIL FOOD 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 RETAIL FOOD GROUP 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 RETAIL FOOD i.e., RETAIL FOOD and Costco Wholesale go up and down completely randomly.
Pair Corralation between RETAIL FOOD and Costco Wholesale
Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to generate 1.77 times more return on investment than Costco Wholesale. However, RETAIL FOOD is 1.77 times more volatile than Costco Wholesale Corp. It trades about 0.25 of its potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.39 per unit of risk. If you would invest 3.70 in RETAIL FOOD GROUP on August 27, 2024 and sell it today you would earn a total of 0.50 from holding RETAIL FOOD GROUP or generate 13.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RETAIL FOOD GROUP vs. Costco Wholesale Corp
Performance |
| Timeline |
| RETAIL FOOD GROUP |
| Costco Wholesale Corp |
RETAIL FOOD and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RETAIL FOOD and Costco Wholesale
The main advantage of trading using opposite RETAIL FOOD and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD 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.| RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc |
| Costco Wholesale vs. Mitsui Chemicals | Costco Wholesale vs. JJ SNACK FOODS | Costco Wholesale vs. Mitsubishi Gas Chemical | Costco Wholesale vs. United Natural Foods |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |