Correlation Between Plaza Retail and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Plaza Retail 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 Plaza Retail and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plaza Retail REIT and Costco Wholesale Corp, you can compare the effects of market volatilities on Plaza Retail 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 Plaza Retail with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plaza Retail and Costco Wholesale.
Diversification Opportunities for Plaza Retail and Costco Wholesale
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Plaza and Costco is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT 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 Plaza Retail 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 Plaza Retail REIT 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 Plaza Retail i.e., Plaza Retail and Costco Wholesale go up and down completely randomly.
Pair Corralation between Plaza Retail and Costco Wholesale
Assuming the 90 days trading horizon Plaza Retail is expected to generate 2.25 times less return on investment than Costco Wholesale. But when comparing it to its historical volatility, Plaza Retail REIT is 1.49 times less risky than Costco Wholesale. It trades about 0.07 of its potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,548 in Costco Wholesale Corp on August 29, 2024 and sell it today you would earn a total of 913.00 from holding Costco Wholesale Corp or generate 25.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plaza Retail REIT vs. Costco Wholesale Corp
Performance |
| Timeline |
| Plaza Retail REIT |
| Costco Wholesale Corp |
Plaza Retail and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plaza Retail and Costco Wholesale
The main advantage of trading using opposite Plaza Retail and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plaza Retail 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.| Plaza Retail vs. Slate Office REIT | Plaza Retail vs. Automotive Properties Real | Plaza Retail vs. BTB Real Estate | Plaza Retail vs. CT Real Estate |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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