Correlation Between Costco Wholesale and MAHLE Metal
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and MAHLE Metal 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 MAHLE Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale and MAHLE Metal Leve, you can compare the effects of market volatilities on Costco Wholesale and MAHLE Metal 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 MAHLE Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and MAHLE Metal.
Diversification Opportunities for Costco Wholesale and MAHLE Metal
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Costco and MAHLE is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and MAHLE Metal Leve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAHLE Metal Leve 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 MAHLE Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAHLE Metal Leve has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and MAHLE Metal go up and down completely randomly.
Pair Corralation between Costco Wholesale and MAHLE Metal
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 1.26 times more return on investment than MAHLE Metal. However, Costco Wholesale is 1.26 times more volatile than MAHLE Metal Leve. It trades about 0.21 of its potential returns per unit of risk. MAHLE Metal Leve is currently generating about -0.13 per unit of risk. If you would invest 12,253 in Costco Wholesale on September 6, 2024 and sell it today you would earn a total of 2,742 from holding Costco Wholesale or generate 22.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Costco Wholesale vs. MAHLE Metal Leve
Performance |
Timeline |
Costco Wholesale |
MAHLE Metal Leve |
Costco Wholesale and MAHLE Metal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Costco Wholesale and MAHLE Metal
The main advantage of trading using opposite Costco Wholesale and MAHLE Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, MAHLE Metal 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 MAHLE Metal will offset losses from the drop in MAHLE Metal's long position.Costco Wholesale vs. Credit Acceptance | Costco Wholesale vs. Charter Communications | Costco Wholesale vs. Deutsche Bank Aktiengesellschaft | Costco Wholesale vs. HDFC Bank Limited |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |