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 CDR, 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
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between XFB and COSTCO is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR 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 CDR 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 1.55 times more volatile than COSTCO WHOLESALE CDR. It trades about -0.02 of its total potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.09 per unit of volatility. If you would invest 1,506 in COSTCO WHOLESALE CDR on September 4, 2024 and sell it today you would earn a total of 1,454 from holding COSTCO WHOLESALE CDR or generate 96.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. COSTCO WHOLESALE CDR
Performance |
| Timeline |
| X FAB Silicon |
| COSTCO WHOLESALE CDR |
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.The idea behind X FAB Silicon Foundries and COSTCO WHOLESALE CDR 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. Walmart | COSTCO WHOLESALE vs. Superior Plus Corp | COSTCO WHOLESALE vs. NMI Holdings | COSTCO WHOLESALE vs. Origin Agritech |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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