Correlation Between Costco Wholesale and George Weston

Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and George Weston 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 George Weston 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 George Weston 475, you can compare the effects of market volatilities on Costco Wholesale and George Weston 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 George Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and George Weston.

Diversification Opportunities for Costco Wholesale and George Weston

-0.47

Correlation Coefficient

Costco Wholesale  George Weston

Very good diversification

The 3 months correlation between Costco and George is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and George Weston 475 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Weston 475 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 George Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Weston 475 has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and George Weston go up and down completely randomly.

Pair Corralation between Costco Wholesale and George Weston

Assuming the 90 days trading horizon Costco Wholesale Corp is expected to generate 2.08 times more return on investment than George Weston. However, Costco Wholesale is 2.08 times more volatile than George Weston 475. It trades about 0.36 of its potential returns per unit of risk. George Weston 475 is currently generating about -0.01 per unit of risk. If you would invest  4,110  in Costco Wholesale Corp on September 4, 2024 and sell it today you would earn a total of  414.00  from holding Costco Wholesale Corp or generate 10.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Costco Wholesale Corp  vs.  George Weston 475

Costco Wholesale Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Costco Wholesale may actually be approaching a critical reversion point that can send shares even higher in January 2025.

George Weston 475

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days George Weston 475 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, George Weston is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Costco Wholesale and George Weston

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

The idea behind Costco Wholesale Corp and George Weston 475 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.