Correlation Between Ross Stores and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Ross Stores 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 Ross Stores and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Costco Wholesale, you can compare the effects of market volatilities on Ross Stores 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 Ross Stores with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Costco Wholesale.
Diversification Opportunities for Ross Stores and Costco Wholesale
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ross and Costco is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale and Ross Stores 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 Ross Stores 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 has no effect on the direction of Ross Stores i.e., Ross Stores and Costco Wholesale go up and down completely randomly.
Pair Corralation between Ross Stores and Costco Wholesale
Assuming the 90 days trading horizon Ross Stores is expected to generate 1.08 times more return on investment than Costco Wholesale. However, Ross Stores is 1.08 times more volatile than Costco Wholesale. It trades about 0.39 of its potential returns per unit of risk. Costco Wholesale is currently generating about 0.41 per unit of risk. If you would invest 40,407 in Ross Stores on September 1, 2024 and sell it today you would earn a total of 6,193 from holding Ross Stores or generate 15.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. Costco Wholesale
Performance |
| Timeline |
| Ross Stores |
| Costco Wholesale |
Ross Stores and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Costco Wholesale
The main advantage of trading using opposite Ross Stores and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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.| Ross Stores vs. BTG Pactual Logstica | Ross Stores vs. Plano Plano Desenvolvimento | Ross Stores vs. Cable One | Ross Stores vs. ATMA Participaes SA |
| Costco Wholesale vs. Walmart | Costco Wholesale vs. Fras le SA | Costco Wholesale vs. Energisa SA | Costco Wholesale vs. Clave Indices De |
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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