Correlation Between URBAN OUTFITTERS and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both URBAN OUTFITTERS 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 URBAN OUTFITTERS and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between URBAN OUTFITTERS and Costco Wholesale Corp, you can compare the effects of market volatilities on URBAN OUTFITTERS 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 URBAN OUTFITTERS with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of URBAN OUTFITTERS and Costco Wholesale.
Diversification Opportunities for URBAN OUTFITTERS and Costco Wholesale
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between URBAN and Costco is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding URBAN OUTFITTERS 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 URBAN OUTFITTERS 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 URBAN OUTFITTERS 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 URBAN OUTFITTERS i.e., URBAN OUTFITTERS and Costco Wholesale go up and down completely randomly.
Pair Corralation between URBAN OUTFITTERS and Costco Wholesale
Assuming the 90 days trading horizon URBAN OUTFITTERS is expected to generate 2.14 times more return on investment than Costco Wholesale. However, URBAN OUTFITTERS is 2.14 times more volatile than Costco Wholesale Corp. It trades about 0.12 of its potential returns per unit of risk. Costco Wholesale Corp is currently generating about -0.31 per unit of risk. If you would invest 5,200 in URBAN OUTFITTERS on October 16, 2024 and sell it today you would earn a total of 200.00 from holding URBAN OUTFITTERS or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
URBAN OUTFITTERS vs. Costco Wholesale Corp
Performance |
| Timeline |
| URBAN OUTFITTERS |
| Costco Wholesale Corp |
URBAN OUTFITTERS and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with URBAN OUTFITTERS and Costco Wholesale
The main advantage of trading using opposite URBAN OUTFITTERS and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if URBAN OUTFITTERS 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.| URBAN OUTFITTERS vs. Sims Metal Management | URBAN OUTFITTERS vs. The Japan Steel | URBAN OUTFITTERS vs. Xiwang Special Steel | URBAN OUTFITTERS vs. Sch Environnement SA |
| Costco Wholesale vs. American Public Education | Costco Wholesale vs. Forsys Metals Corp | Costco Wholesale vs. CAREER EDUCATION | Costco Wholesale vs. Jacquet Metal Service |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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