Correlation Between Costco Wholesale and Canso Select

Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Canso Select 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 Canso Select 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 Canso Select Opportunities, you can compare the effects of market volatilities on Costco Wholesale and Canso Select 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 Canso Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Canso Select.

Diversification Opportunities for Costco Wholesale and Canso Select

0.16

Correlation Coefficient

Costco Wholesale  Canso Select

Average diversification

The 3 months correlation between Costco and Canso is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Canso Select Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canso Select Opportu 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 Canso Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canso Select Opportu has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Canso Select go up and down completely randomly.

Pair Corralation between Costco Wholesale and Canso Select

Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 0.28 times more return on investment than Canso Select. However, Costco Wholesale Corp is 3.6 times less risky than Canso Select. It trades about 0.08 of its potential returns per unit of risk. Canso Select Opportunities is currently generating about -0.06 per unit of risk. If you would invest  4,136  in Costco Wholesale Corp on October 27, 2024 and sell it today you would earn a total of  211.00  from holding Costco Wholesale Corp or generate 5.1% return on investment over 90 days.

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

Costco Wholesale Corp  vs.  Canso Select Opportunities

Costco Wholesale Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 6 (%) 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Canso Select Opportu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canso Select Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Costco Wholesale and Canso Select

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

The idea behind Costco Wholesale Corp and Canso Select Opportunities 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.