Correlation Between Costco Wholesale and Fibra Shop

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

By analyzing existing cross correlation between Costco Wholesale and Fibra Shop, you can compare the effects of market volatilities on Costco Wholesale and Fibra Shop 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 Fibra Shop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Fibra Shop.

Diversification Opportunities for Costco Wholesale and Fibra Shop

-0.17

Correlation Coefficient

Costco Wholesale  Fibra Shop

Good diversification

The 3 months correlation between Costco and Fibra is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and Fibra Shop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra Shop 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 Fibra Shop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra Shop has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Fibra Shop go up and down completely randomly.

Pair Corralation between Costco Wholesale and Fibra Shop

Assuming the 90 days trading horizon Costco Wholesale is expected to under-perform the Fibra Shop. But the stock apears to be less risky and, when comparing its historical volatility, Costco Wholesale is 1.36 times less risky than Fibra Shop. The stock trades about -0.05 of its potential returns per unit of risk. The Fibra Shop is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  848.00  in Fibra Shop on October 27, 2024 and sell it today you would earn a total of  17.00  from holding Fibra Shop or generate 2.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Costco Wholesale  vs.  Fibra Shop

Costco Wholesale

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Costco Wholesale may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fibra Shop

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fibra Shop are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Fibra Shop may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Costco Wholesale and Fibra Shop

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

The idea behind Costco Wholesale and Fibra Shop 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.