Correlation Between Retail Estates and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and Costco Wholesale Corp, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Costco Wholesale.
Diversification Opportunities for Retail Estates and Costco Wholesale
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Retail and Costco is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV 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 Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and Costco Wholesale go up and down completely randomly.
Pair Corralation between Retail Estates and Costco Wholesale
Assuming the 90 days horizon Retail Estates NV is expected to under-perform the Costco Wholesale. But the stock apears to be less risky and, when comparing its historical volatility, Retail Estates NV is 1.41 times less risky than Costco Wholesale. The stock trades about -0.38 of its potential returns per unit of risk. The Costco Wholesale Corp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 83,309 in Costco Wholesale Corp on August 24, 2024 and sell it today you would earn a total of 7,311 from holding Costco Wholesale Corp or generate 8.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Retail Estates NV vs. Costco Wholesale Corp
Performance |
| Timeline |
| Retail Estates NV |
| Costco Wholesale Corp |
Retail Estates and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and Costco Wholesale
The main advantage of trading using opposite Retail Estates and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.| Retail Estates vs. Simon Property Group | Retail Estates vs. Vicinity Centres | Retail Estates vs. Superior Plus Corp | Retail Estates vs. NMI Holdings |
| Costco Wholesale vs. YATRA ONLINE DL 0001 | Costco Wholesale vs. PKSHA TECHNOLOGY INC | Costco Wholesale vs. Salesforce | Costco Wholesale vs. CARSALESCOM |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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