Correlation Between Costco Wholesale and Supermarket Income

Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Supermarket Income 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 Costco Wholesale and Supermarket Income into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Costco Wholesale Corp and Supermarket Income REIT, you can compare the effects of market volatilities on Costco Wholesale and Supermarket Income 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 Costco Wholesale with a short position of Supermarket Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Supermarket Income.

Diversification Opportunities for Costco Wholesale and Supermarket Income

0.13

Correlation Coefficient

Costco Wholesale  Supermarket Income

Average diversification

The 3 months correlation between Costco and Supermarket is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Supermarket Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supermarket Income REIT and Costco Wholesale 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 Costco Wholesale Corp are associated (or correlated) with Supermarket Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supermarket Income REIT has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Supermarket Income go up and down completely randomly.

Pair Corralation between Costco Wholesale and Supermarket Income

Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 12.24 times more return on investment than Supermarket Income. However, Costco Wholesale is 12.24 times more volatile than Supermarket Income REIT. It trades about 0.04 of its potential returns per unit of risk. Supermarket Income REIT is currently generating about -0.05 per unit of risk. If you would invest  49,641  in Costco Wholesale Corp on October 25, 2024 and sell it today you would earn a total of  44,398  from holding Costco Wholesale Corp or generate 89.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Costco Wholesale Corp  vs.  Supermarket Income REIT

Costco Wholesale Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Costco Wholesale is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Supermarket Income REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Supermarket Income REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Costco Wholesale and Supermarket Income

The main advantage of trading using opposite Costco Wholesale and Supermarket Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Supermarket Income 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 Supermarket Income will offset losses from the drop in Supermarket Income's long position.

The idea behind Costco Wholesale Corp and Supermarket Income REIT 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.