Correlation Between United Guardian and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both United Guardian 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 United Guardian and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Guardian and Costco Wholesale Corp, you can compare the effects of market volatilities on United Guardian 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 United Guardian with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Guardian and Costco Wholesale.
Diversification Opportunities for United Guardian and Costco Wholesale
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Costco is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian 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 United Guardian 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 United Guardian 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 United Guardian i.e., United Guardian and Costco Wholesale go up and down completely randomly.
Pair Corralation between United Guardian and Costco Wholesale
Allowing for the 90-day total investment horizon United Guardian is expected to under-perform the Costco Wholesale. In addition to that, United Guardian is 1.73 times more volatile than Costco Wholesale Corp. It trades about -0.08 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.34 per unit of volatility. If you would invest 91,951 in Costco Wholesale Corp on September 18, 2024 and sell it today you would earn a total of 6,257 from holding Costco Wholesale Corp or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Guardian vs. Costco Wholesale Corp
Performance |
| Timeline |
| United Guardian |
| Costco Wholesale Corp |
United Guardian and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Guardian and Costco Wholesale
The main advantage of trading using opposite United Guardian and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Guardian 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.| United Guardian vs. Helen of Troy | United Guardian vs. European Wax Center | United Guardian vs. Spectrum Brands Holdings |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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