Correlation Between MOVIE GAMES and Costco Wholesale

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

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

Diversification Opportunities for MOVIE GAMES and Costco Wholesale

-0.64

Correlation Coefficient

MOVIE GAMES  Costco Wholesale

Excellent diversification

The 3 months correlation between MOVIE and Costco is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding MOVIE GAMES SA 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 MOVIE GAMES 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 MOVIE GAMES 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 Corp has no effect on the direction of MOVIE GAMES i.e., MOVIE GAMES and Costco Wholesale go up and down completely randomly.

Pair Corralation between MOVIE GAMES and Costco Wholesale

Assuming the 90 days horizon MOVIE GAMES is expected to generate 1.14 times less return on investment than Costco Wholesale. In addition to that, MOVIE GAMES is 3.42 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 0.13 per unit of volatility. If you would invest  82,231  in Costco Wholesale Corp on October 26, 2024 and sell it today you would earn a total of  7,869  from holding Costco Wholesale Corp or generate 9.57% return on investment over 90 days.

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

MOVIE GAMES SA  vs.  Costco Wholesale Corp

MOVIE GAMES SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MOVIE GAMES SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MOVIE GAMES may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Costco Wholesale Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Costco Wholesale may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MOVIE GAMES and Costco Wholesale

The main advantage of trading using opposite MOVIE GAMES and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOVIE GAMES 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 MOVIE GAMES SA and Costco Wholesale Corp 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.