Correlation Between LIFEWAY FOODS and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both LIFEWAY FOODS 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 LIFEWAY FOODS and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFEWAY FOODS and Costco Wholesale Corp, you can compare the effects of market volatilities on LIFEWAY FOODS 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 LIFEWAY FOODS with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFEWAY FOODS and Costco Wholesale.
Diversification Opportunities for LIFEWAY FOODS and Costco Wholesale
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LIFEWAY and Costco is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS 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 LIFEWAY FOODS 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 LIFEWAY FOODS 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 LIFEWAY FOODS i.e., LIFEWAY FOODS and Costco Wholesale go up and down completely randomly.
Pair Corralation between LIFEWAY FOODS and Costco Wholesale
Assuming the 90 days trading horizon LIFEWAY FOODS is expected to under-perform the Costco Wholesale. In addition to that, LIFEWAY FOODS is 2.46 times more volatile than Costco Wholesale Corp. It trades about -0.07 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.39 per unit of volatility. If you would invest 82,231 in Costco Wholesale Corp on August 27, 2024 and sell it today you would earn a total of 10,169 from holding Costco Wholesale Corp or generate 12.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFEWAY FOODS vs. Costco Wholesale Corp
Performance |
| Timeline |
| LIFEWAY FOODS |
| Costco Wholesale Corp |
LIFEWAY FOODS and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFEWAY FOODS and Costco Wholesale
The main advantage of trading using opposite LIFEWAY FOODS and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFEWAY FOODS 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.| LIFEWAY FOODS vs. Microchip Technology Incorporated | LIFEWAY FOODS vs. DXC Technology Co | LIFEWAY FOODS vs. CapitaLand Investment Limited | LIFEWAY FOODS vs. MGIC INVESTMENT |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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