Correlation Between Atrium Mortgage and Costco Wholesale

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

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

Diversification Opportunities for Atrium Mortgage and Costco Wholesale

0.05

Correlation Coefficient

Atrium Mortgage  Costco Wholesale

Significant diversification

The 3 months correlation between Atrium and Costco is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Atrium Mortgage Investment 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 Atrium Mortgage 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 Atrium Mortgage Investment 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 Atrium Mortgage i.e., Atrium Mortgage and Costco Wholesale go up and down completely randomly.

Pair Corralation between Atrium Mortgage and Costco Wholesale

Assuming the 90 days horizon Atrium Mortgage Investment is expected to generate 0.61 times more return on investment than Costco Wholesale. However, Atrium Mortgage Investment is 1.63 times less risky than Costco Wholesale. It trades about 0.01 of its potential returns per unit of risk. Costco Wholesale Corp is currently generating about -0.04 per unit of risk. If you would invest  1,076  in Atrium Mortgage Investment on December 21, 2024 and sell it today you would earn a total of  1.00  from holding Atrium Mortgage Investment or generate 0.09% return on investment over 90 days.

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

Atrium Mortgage Investment  vs.  Costco Wholesale Corp

Atrium Mortgage Inve

Risk-Adjusted Performance

Weak

Over the last 90 days Atrium Mortgage Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Atrium Mortgage is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Costco Wholesale Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Costco Wholesale Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Costco Wholesale is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Atrium Mortgage and Costco Wholesale

The main advantage of trading using opposite Atrium Mortgage and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atrium Mortgage 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 Atrium Mortgage Investment 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.