Correlation Between Chiba Bank and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Chiba Bank 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 Chiba Bank and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chiba Bank and Costco Wholesale, you can compare the effects of market volatilities on Chiba Bank 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 Chiba Bank with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiba Bank and Costco Wholesale.
Diversification Opportunities for Chiba Bank and Costco Wholesale
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chiba and Costco is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale and Chiba Bank 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 Chiba Bank 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 Chiba Bank i.e., Chiba Bank and Costco Wholesale go up and down completely randomly.
Pair Corralation between Chiba Bank and Costco Wholesale
Assuming the 90 days horizon Chiba Bank is expected to generate 1.26 times less return on investment than Costco Wholesale. In addition to that, Chiba Bank is 1.28 times more volatile than Costco Wholesale. It trades about 0.12 of its total potential returns per unit of risk. Costco Wholesale is currently generating about 0.19 per unit of volatility. If you would invest 94,068 in Costco Wholesale on December 2, 2024 and sell it today you would earn a total of 5,282 from holding Costco Wholesale or generate 5.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Chiba Bank vs. Costco Wholesale
Performance |
Timeline |
Chiba Bank |
Costco Wholesale |
Chiba Bank and Costco Wholesale Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chiba Bank and Costco Wholesale
The main advantage of trading using opposite Chiba Bank and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chiba Bank 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.Chiba Bank vs. Focus Home Interactive | Chiba Bank vs. INVITATION HOMES DL | Chiba Bank vs. Bumrungrad Hospital PCL | Chiba Bank vs. CAIRN HOMES EO |
Costco Wholesale vs. AUTO TRADER ADR | Costco Wholesale vs. Carnegie Clean Energy | Costco Wholesale vs. Ultra Clean Holdings | Costco Wholesale vs. Retail Estates NV |
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 Stocks Directory module to find actively traded stocks across global markets.
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