Correlation Between PPHE Hotel and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both PPHE Hotel 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 PPHE Hotel and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPHE Hotel Group and Costco Wholesale Corp, you can compare the effects of market volatilities on PPHE Hotel 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 PPHE Hotel with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE Hotel and Costco Wholesale.
Diversification Opportunities for PPHE Hotel and Costco Wholesale
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PPHE and Costco is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel 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 PPHE Hotel 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 PPHE Hotel 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 PPHE Hotel i.e., PPHE Hotel and Costco Wholesale go up and down completely randomly.
Pair Corralation between PPHE Hotel and Costco Wholesale
Assuming the 90 days trading horizon PPHE Hotel Group is expected to generate 1.89 times more return on investment than Costco Wholesale. However, PPHE Hotel is 1.89 times more volatile than Costco Wholesale Corp. It trades about -0.04 of its potential returns per unit of risk. Costco Wholesale Corp is currently generating about -0.36 per unit of risk. If you would invest 131,000 in PPHE Hotel Group on October 11, 2024 and sell it today you would lose (2,000) from holding PPHE Hotel Group or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
PPHE Hotel Group vs. Costco Wholesale Corp
Performance |
| Timeline |
| PPHE Hotel Group |
| Costco Wholesale Corp |
PPHE Hotel and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE Hotel and Costco Wholesale
The main advantage of trading using opposite PPHE Hotel and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE Hotel 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.| PPHE Hotel vs. Beazer Homes USA | PPHE Hotel vs. Herald Investment Trust | PPHE Hotel vs. Zurich Insurance Group | PPHE Hotel vs. Travel Leisure Co |
| Costco Wholesale vs. PPHE Hotel Group | Costco Wholesale vs. Wyndham Hotels Resorts | Costco Wholesale vs. Gamma Communications PLC | Costco Wholesale vs. Infrastrutture Wireless Italiane |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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