Correlation Between Air Transport and COSTCO WHOLESALE
Can any of the company-specific risk be diversified away by investing in both Air Transport 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 Air Transport and COSTCO WHOLESALE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on Air Transport 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 Air Transport with a short position of COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and COSTCO WHOLESALE.
Diversification Opportunities for Air Transport and COSTCO WHOLESALE
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and COSTCO is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR and Air Transport 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 Air Transport Services 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 CDR has no effect on the direction of Air Transport i.e., Air Transport and COSTCO WHOLESALE go up and down completely randomly.
Pair Corralation between Air Transport and COSTCO WHOLESALE
Assuming the 90 days horizon Air Transport Services is expected to generate 0.3 times more return on investment than COSTCO WHOLESALE. However, Air Transport Services is 3.28 times less risky than COSTCO WHOLESALE. It trades about -0.05 of its potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about -0.04 per unit of risk. If you would invest 2,100 in Air Transport Services on December 28, 2024 and sell it today you would lose (40.00) from holding Air Transport Services or give up 1.9% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Air Transport Services vs. COSTCO WHOLESALE CDR
Performance |
Timeline |
Air Transport Services |
COSTCO WHOLESALE CDR |
Air Transport and COSTCO WHOLESALE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Air Transport and COSTCO WHOLESALE
The main advantage of trading using opposite Air Transport and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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.Air Transport vs. CSSC Offshore Marine | Air Transport vs. WT OFFSHORE | Air Transport vs. Jacquet Metal Service | Air Transport vs. Chuangs China Investments |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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