Correlation Between Costco Wholesale and INVEX Controladora

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

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

Diversification Opportunities for Costco Wholesale and INVEX Controladora

0.04

Correlation Coefficient

Costco Wholesale  INVEX Controladora

Significant diversification

The 3 months correlation between Costco and INVEX is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and INVEX Controladora SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVEX Controladora SAB 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 INVEX Controladora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVEX Controladora SAB has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and INVEX Controladora go up and down completely randomly.

Pair Corralation between Costco Wholesale and INVEX Controladora

Assuming the 90 days trading horizon Costco Wholesale is expected to generate 3.5 times more return on investment than INVEX Controladora. However, Costco Wholesale is 3.5 times more volatile than INVEX Controladora SAB. It trades about 0.12 of its potential returns per unit of risk. INVEX Controladora SAB is currently generating about 0.02 per unit of risk. If you would invest  1,556,294  in Costco Wholesale on September 26, 2024 and sell it today you would earn a total of  360,836  from holding Costco Wholesale or generate 23.19% return on investment over 90 days.

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

Costco Wholesale  vs.  INVEX Controladora SAB

Costco Wholesale

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale are ranked lower than 7 (%) 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 January 2025.

INVEX Controladora SAB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INVEX Controladora SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, INVEX Controladora is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Costco Wholesale and INVEX Controladora

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

The idea behind Costco Wholesale and INVEX Controladora SAB 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.