Correlation Between SPARTAN STORES and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both SPARTAN 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 SPARTAN 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 SPARTAN STORES and Costco Wholesale Corp, you can compare the effects of market volatilities on SPARTAN 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 SPARTAN STORES with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPARTAN STORES and Costco Wholesale.
Diversification Opportunities for SPARTAN STORES and Costco Wholesale
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SPARTAN and Costco is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding SPARTAN STORES 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 SPARTAN 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 SPARTAN 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 Corp has no effect on the direction of SPARTAN STORES i.e., SPARTAN STORES and Costco Wholesale go up and down completely randomly.
Pair Corralation between SPARTAN STORES and Costco Wholesale
Assuming the 90 days trading horizon SPARTAN STORES is expected to under-perform the Costco Wholesale. In addition to that, SPARTAN STORES is 2.41 times more volatile than Costco Wholesale Corp. It trades about -0.1 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.41 per unit of volatility. If you would invest 81,080 in Costco Wholesale Corp on September 3, 2024 and sell it today you would earn a total of 10,510 from holding Costco Wholesale Corp or generate 12.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPARTAN STORES vs. Costco Wholesale Corp
Performance |
| Timeline |
| SPARTAN STORES |
| Costco Wholesale Corp |
SPARTAN STORES and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPARTAN STORES and Costco Wholesale
The main advantage of trading using opposite SPARTAN STORES and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPARTAN 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.| SPARTAN STORES vs. Playa Hotels Resorts | SPARTAN STORES vs. TYSON FOODS A | SPARTAN STORES vs. Host Hotels Resorts | SPARTAN STORES vs. Pebblebrook Hotel Trust |
| Costco Wholesale vs. TOTAL GABON | Costco Wholesale vs. Walgreens Boots Alliance | Costco Wholesale vs. Peak Resources Limited |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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