Correlation Between X FAB and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both X FAB 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 X FAB and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X FAB Silicon Foundries and Costco Wholesale Corp, you can compare the effects of market volatilities on X FAB 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 X FAB with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Costco Wholesale.
Diversification Opportunities for X FAB and Costco Wholesale
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between XFB and Costco is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries 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 X FAB 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 X FAB Silicon Foundries 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 X FAB i.e., X FAB and Costco Wholesale go up and down completely randomly.
Pair Corralation between X FAB and Costco Wholesale
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Costco Wholesale. In addition to that, X FAB is 2.41 times more volatile than Costco Wholesale Corp. It trades about -0.07 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.28 per unit of volatility. If you would invest 89,030 in Costco Wholesale Corp on November 6, 2024 and sell it today you would earn a total of 5,910 from holding Costco Wholesale Corp or generate 6.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Costco Wholesale Corp
Performance |
| Timeline |
| X FAB Silicon |
| Costco Wholesale Corp |
X FAB and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Costco Wholesale
The main advantage of trading using opposite X FAB and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB 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.| X FAB vs. MOLSON RS BEVERAGE | X FAB vs. CAL MAINE FOODS | X FAB vs. GBS Software AG | X FAB vs. Magic Software Enterprises |
| Costco Wholesale vs. East Africa Metals | Costco Wholesale vs. FIREWEED METALS P | Costco Wholesale vs. MAGNUM MINING EXP | Costco Wholesale vs. GREENX METALS LTD |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |