Correlation Between Roebuck Food and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Roebuck Food 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 Roebuck Food and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roebuck Food Group and Costco Wholesale Corp, you can compare the effects of market volatilities on Roebuck Food 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 Roebuck Food with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roebuck Food and Costco Wholesale.
Diversification Opportunities for Roebuck Food and Costco Wholesale
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Roebuck and Costco is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Roebuck Food 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 Roebuck Food 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 Roebuck Food 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 Roebuck Food i.e., Roebuck Food and Costco Wholesale go up and down completely randomly.
Pair Corralation between Roebuck Food and Costco Wholesale
Assuming the 90 days trading horizon Roebuck Food is expected to generate 2.49 times less return on investment than Costco Wholesale. But when comparing it to its historical volatility, Roebuck Food Group is 1.6 times less risky than Costco Wholesale. It trades about 0.21 of its potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 92,047 in Costco Wholesale Corp on November 7, 2024 and sell it today you would earn a total of 6,549 from holding Costco Wholesale Corp or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Roebuck Food Group vs. Costco Wholesale Corp
Performance |
| Timeline |
| Roebuck Food Group |
| Costco Wholesale Corp |
Roebuck Food and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roebuck Food and Costco Wholesale
The main advantage of trading using opposite Roebuck Food and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roebuck Food 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.| Roebuck Food vs. Discover Financial Services | Roebuck Food vs. Summit Materials Cl | Roebuck Food vs. UNIQA Insurance Group | Roebuck Food vs. Deutsche Pfandbriefbank AG |
| Costco Wholesale vs. Sabre Insurance Group | Costco Wholesale vs. Gaztransport et Technigaz | Costco Wholesale vs. Ecclesiastical Insurance Office | Costco Wholesale vs. AfriTin Mining |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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