Correlation Between VersaBank and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both VersaBank 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 VersaBank and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Costco Wholesale Corp, you can compare the effects of market volatilities on VersaBank 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 VersaBank with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Costco Wholesale.
Diversification Opportunities for VersaBank and Costco Wholesale
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between VersaBank and Costco is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank 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 VersaBank 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 VersaBank 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 VersaBank i.e., VersaBank and Costco Wholesale go up and down completely randomly.
Pair Corralation between VersaBank and Costco Wholesale
Assuming the 90 days trading horizon VersaBank is expected to generate 1.74 times more return on investment than Costco Wholesale. However, VersaBank is 1.74 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 0.15 per unit of risk. If you would invest 1,122 in VersaBank on August 26, 2024 and sell it today you would earn a total of 1,248 from holding VersaBank or generate 111.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. Costco Wholesale Corp
Performance |
| Timeline |
| VersaBank |
| Costco Wholesale Corp |
VersaBank and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Costco Wholesale
The main advantage of trading using opposite VersaBank and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank 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.| VersaBank vs. Sylogist | VersaBank vs. Sangoma Technologies Corp | VersaBank vs. Firan Technology Group | VersaBank vs. Hammond Power Solutions |
| Costco Wholesale vs. Chatham Rock Phosphate | Costco Wholesale vs. Alaska Energy Metals | Costco Wholesale vs. Elixxer | Costco Wholesale vs. Cielo Waste Solutions |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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