Correlation Between Costco Wholesale and Metalurgica Gerdau
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Metalurgica Gerdau 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 Metalurgica Gerdau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale and Metalurgica Gerdau SA, you can compare the effects of market volatilities on Costco Wholesale and Metalurgica Gerdau 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 Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Metalurgica Gerdau.
Diversification Opportunities for Costco Wholesale and Metalurgica Gerdau
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Costco and Metalurgica is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau 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 Metalurgica Gerdau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Gerdau has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Metalurgica Gerdau go up and down completely randomly.
Pair Corralation between Costco Wholesale and Metalurgica Gerdau
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 0.87 times more return on investment than Metalurgica Gerdau. However, Costco Wholesale is 1.15 times less risky than Metalurgica Gerdau. It trades about 0.19 of its potential returns per unit of risk. Metalurgica Gerdau SA is currently generating about 0.09 per unit of risk. If you would invest 12,644 in Costco Wholesale on September 10, 2024 and sell it today you would earn a total of 2,536 from holding Costco Wholesale or generate 20.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Costco Wholesale vs. Metalurgica Gerdau SA
Performance |
Timeline |
Costco Wholesale |
Metalurgica Gerdau |
Costco Wholesale and Metalurgica Gerdau Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Costco Wholesale and Metalurgica Gerdau
The main advantage of trading using opposite Costco Wholesale and Metalurgica Gerdau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Metalurgica Gerdau 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 Metalurgica Gerdau will offset losses from the drop in Metalurgica Gerdau's long position.Costco Wholesale vs. LIFE CAPITAL PARTNERS | Costco Wholesale vs. Jalles Machado SA | Costco Wholesale vs. EOG Resources | Costco Wholesale vs. Fras le SA |
Metalurgica Gerdau vs. Usinas Siderrgicas de | Metalurgica Gerdau vs. Gerdau SA | Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Companhia Energtica de |
Check out your portfolio center.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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
CEOs Directory Screen CEOs from public companies around the world |