Correlation Between TRAINLINE PLC and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC 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 TRAINLINE PLC and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAINLINE PLC LS and Costco Wholesale Corp, you can compare the effects of market volatilities on TRAINLINE PLC 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 TRAINLINE PLC with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and Costco Wholesale.
Diversification Opportunities for TRAINLINE PLC and Costco Wholesale
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TRAINLINE and Costco is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS 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 TRAINLINE PLC 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 TRAINLINE PLC LS 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 TRAINLINE PLC i.e., TRAINLINE PLC and Costco Wholesale go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and Costco Wholesale
Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to generate 2.04 times more return on investment than Costco Wholesale. However, TRAINLINE PLC is 2.04 times more volatile than Costco Wholesale Corp. It trades about -0.14 of its potential returns per unit of risk. Costco Wholesale Corp is currently generating about -0.31 per unit of risk. If you would invest 515.00 in TRAINLINE PLC LS on October 9, 2024 and sell it today you would lose (23.00) from holding TRAINLINE PLC LS or give up 4.47% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
TRAINLINE PLC LS vs. Costco Wholesale Corp
Performance |
Timeline |
TRAINLINE PLC LS |
Costco Wholesale Corp |
TRAINLINE PLC and Costco Wholesale Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TRAINLINE PLC and Costco Wholesale
The main advantage of trading using opposite TRAINLINE PLC and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC 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.TRAINLINE PLC vs. TITANIUM TRANSPORTGROUP | TRAINLINE PLC vs. Ares Management Corp | TRAINLINE PLC vs. Gold Road Resources | TRAINLINE PLC vs. AGF Management Limited |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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