Correlation Between WEG SA and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both WEG SA 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 WEG SA and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WEG SA and Costco Wholesale, you can compare the effects of market volatilities on WEG SA 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 WEG SA with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEG SA and Costco Wholesale.
Diversification Opportunities for WEG SA and Costco Wholesale
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between WEG and Costco is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding WEG SA and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale and WEG SA 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 WEG SA 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 WEG SA i.e., WEG SA and Costco Wholesale go up and down completely randomly.
Pair Corralation between WEG SA and Costco Wholesale
Assuming the 90 days trading horizon WEG SA is expected to generate 1.14 times less return on investment than Costco Wholesale. But when comparing it to its historical volatility, WEG SA is 1.3 times less risky than Costco Wholesale. It trades about 0.23 of its potential returns per unit of risk. Costco Wholesale is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 13,830 in Costco Wholesale on September 25, 2024 and sell it today you would earn a total of 1,039 from holding Costco Wholesale or generate 7.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WEG SA vs. Costco Wholesale
Performance |
| Timeline |
| WEG SA |
| Costco Wholesale |
WEG SA and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WEG SA and Costco Wholesale
The main advantage of trading using opposite WEG SA and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEG SA 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.The idea behind WEG SA and Costco Wholesale pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Costco Wholesale vs. salesforce inc | Costco Wholesale vs. Livetech da Bahia | Costco Wholesale vs. Marvell Technology | Costco Wholesale vs. GP Investments |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |