Correlation Between Costco Wholesale and Internacional

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

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

Diversification Opportunities for Costco Wholesale and Internacional

0.0

Correlation Coefficient

Costco Wholesale  Internacional

Pay attention - limited upside

The 3 months correlation between Costco and Internacional is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and Internacional de Cermica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internacional de Cermica and Costco Wholesale 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 Costco Wholesale are associated (or correlated) with Internacional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internacional de Cermica has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Internacional go up and down completely randomly.

Pair Corralation between Costco Wholesale and Internacional

If you would invest  1,716,524  in Costco Wholesale on September 14, 2024 and sell it today you would earn a total of  308,629  from holding Costco Wholesale or generate 17.98% return on investment over 90 days.

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

Costco Wholesale  vs.  Internacional de Cermica

Costco Wholesale

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Costco Wholesale showed solid returns over the last few months and may actually be approaching a breakup point.

Internacional de Cermica

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Costco Wholesale and Internacional

The main advantage of trading using opposite Costco Wholesale and Internacional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Internacional 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 Internacional will offset losses from the drop in Internacional's long position.

The idea behind Costco Wholesale and Internacional de Cermica 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.