Correlation Between Exxon and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Exxon 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 Exxon and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EXXON MOBIL CDR and Costco Wholesale Corp, you can compare the effects of market volatilities on Exxon 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 Exxon with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Costco Wholesale.
Diversification Opportunities for Exxon and Costco Wholesale
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Exxon and Costco is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding EXXON MOBIL CDR 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 Exxon 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 EXXON MOBIL CDR 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 Exxon i.e., Exxon and Costco Wholesale go up and down completely randomly.
Pair Corralation between Exxon and Costco Wholesale
Assuming the 90 days trading horizon Exxon is expected to generate 3.54 times less return on investment than Costco Wholesale. In addition to that, Exxon is 1.15 times more volatile than Costco Wholesale Corp. It trades about 0.03 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.12 per unit of volatility. If you would invest 3,799 in Costco Wholesale Corp on September 1, 2024 and sell it today you would earn a total of 719.00 from holding Costco Wholesale Corp or generate 18.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EXXON MOBIL CDR vs. Costco Wholesale Corp
Performance |
| Timeline |
| EXXON MOBIL CDR |
| Costco Wholesale Corp |
Exxon and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Costco Wholesale
The main advantage of trading using opposite Exxon and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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.| Exxon vs. Orbit Garant Drilling | Exxon vs. US Financial 15 | Exxon vs. Financial 15 Split | Exxon vs. First National Financial |
| Costco Wholesale vs. Amazon CDR | Costco Wholesale vs. Berkshire Hathaway CDR | Costco Wholesale vs. UnitedHealth Group CDR | Costco Wholesale vs. Apple Inc CDR |
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 Stocks Directory module to find actively traded stocks across global markets.
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