Correlation Between METISA Metalrgica and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both METISA Metalrgica 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 METISA Metalrgica and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METISA Metalrgica Timboense and Costco Wholesale, you can compare the effects of market volatilities on METISA Metalrgica 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 METISA Metalrgica with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of METISA Metalrgica and Costco Wholesale.
Diversification Opportunities for METISA Metalrgica and Costco Wholesale
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between METISA and Costco is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale and METISA Metalrgica 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 METISA Metalrgica Timboense 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 METISA Metalrgica i.e., METISA Metalrgica and Costco Wholesale go up and down completely randomly.
Pair Corralation between METISA Metalrgica and Costco Wholesale
Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to under-perform the Costco Wholesale. In addition to that, METISA Metalrgica is 1.46 times more volatile than Costco Wholesale. It trades about -0.02 of its total potential returns per unit of risk. Costco Wholesale is currently generating about 0.38 per unit of volatility. If you would invest 12,726 in Costco Wholesale on August 31, 2024 and sell it today you would earn a total of 1,778 from holding Costco Wholesale or generate 13.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
METISA Metalrgica Timboense vs. Costco Wholesale
Performance |
| Timeline |
| METISA Metalrgica |
| Costco Wholesale |
METISA Metalrgica and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METISA Metalrgica and Costco Wholesale
The main advantage of trading using opposite METISA Metalrgica and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METISA Metalrgica 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.| METISA Metalrgica vs. Fras le SA | METISA Metalrgica vs. PBG SA | METISA Metalrgica vs. Springs Global Participaes | METISA Metalrgica vs. Indstrias Romi SA |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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