Correlation Between Costco Wholesale and Altagas Cum

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

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

Diversification Opportunities for Costco Wholesale and Altagas Cum

0.68

Correlation Coefficient

Costco Wholesale  Altagas Cum

Poor diversification

The 3 months correlation between Costco and Altagas is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Altagas Cum Red in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altagas Cum Red 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 Corp are associated (or correlated) with Altagas Cum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altagas Cum Red has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Altagas Cum go up and down completely randomly.

Pair Corralation between Costco Wholesale and Altagas Cum

Assuming the 90 days trading horizon Costco Wholesale Corp is expected to under-perform the Altagas Cum. In addition to that, Costco Wholesale is 1.23 times more volatile than Altagas Cum Red. It trades about -0.44 of its total potential returns per unit of risk. Altagas Cum Red is currently generating about 0.39 per unit of volatility. If you would invest  1,955  in Altagas Cum Red on October 9, 2024 and sell it today you would earn a total of  99.00  from holding Altagas Cum Red or generate 5.06% return on investment over 90 days.

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

Costco Wholesale Corp  vs.  Altagas Cum Red

Costco Wholesale Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Costco Wholesale is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Altagas Cum Red

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altagas Cum Red are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Altagas Cum may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Costco Wholesale and Altagas Cum

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

The idea behind Costco Wholesale Corp and Altagas Cum Red 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.