Correlation Between PriceSmart and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both PriceSmart 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 PriceSmart and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PriceSmart and Costco Wholesale Corp, you can compare the effects of market volatilities on PriceSmart 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 PriceSmart with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of PriceSmart and Costco Wholesale.
Diversification Opportunities for PriceSmart and Costco Wholesale
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between PriceSmart and Costco is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding PriceSmart 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 PriceSmart 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 PriceSmart 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 PriceSmart i.e., PriceSmart and Costco Wholesale go up and down completely randomly.
Pair Corralation between PriceSmart and Costco Wholesale
Given the investment horizon of 90 days PriceSmart is expected to under-perform the Costco Wholesale. In addition to that, PriceSmart is 1.59 times more volatile than Costco Wholesale Corp. It trades about -0.02 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.17 per unit of volatility. If you would invest 88,534 in Costco Wholesale Corp on August 31, 2024 and sell it today you would earn a total of 7,621 from holding Costco Wholesale Corp or generate 8.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.78% |
| Values | Daily Returns |
PriceSmart vs. Costco Wholesale Corp
Performance |
| Timeline |
| PriceSmart |
| Costco Wholesale Corp |
PriceSmart and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PriceSmart and Costco Wholesale
The main advantage of trading using opposite PriceSmart and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PriceSmart 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.| PriceSmart vs. Wal Mart de | PriceSmart vs. Pan Pacific International | PriceSmart vs. Dollarama | PriceSmart vs. Dollar General |
| Costco Wholesale vs. Walmart | Costco Wholesale vs. Dollar Tree | Costco Wholesale vs. BJs Wholesale Club | Costco Wholesale vs. Target |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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