Correlation Between Superior Plus and Costco Wholesale

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

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

Diversification Opportunities for Superior Plus and Costco Wholesale

-0.43

Correlation Coefficient

Superior Plus  Costco Wholesale

Very good diversification

The 3 months correlation between Superior and Costco is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale and Superior Plus 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 Superior Plus Corp 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 has no effect on the direction of Superior Plus i.e., Superior Plus and Costco Wholesale go up and down completely randomly.

Pair Corralation between Superior Plus and Costco Wholesale

Assuming the 90 days horizon Superior Plus Corp is expected to generate 1.02 times more return on investment than Costco Wholesale. However, Superior Plus is 1.02 times more volatile than Costco Wholesale. It trades about 0.03 of its potential returns per unit of risk. Costco Wholesale is currently generating about -0.04 per unit of risk. If you would invest  413.00  in Superior Plus Corp on December 27, 2024 and sell it today you would earn a total of  9.00  from holding Superior Plus Corp or generate 2.18% return on investment over 90 days.

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

Superior Plus Corp  vs.  Costco Wholesale

Superior Plus Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Plus Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Superior Plus is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Costco Wholesale

Risk-Adjusted Performance

Very Weak

Over the last 90 days Costco Wholesale has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Costco Wholesale is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Superior Plus and Costco Wholesale

The main advantage of trading using opposite Superior Plus and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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 Superior Plus Corp and Costco Wholesale 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.