Correlation Between Costco Wholesale and Springs Global

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

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

Diversification Opportunities for Costco Wholesale and Springs Global

0.0

Correlation Coefficient

Costco Wholesale  Springs Global

Pay attention - limited upside

The 3 months correlation between Costco and Springs is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and Springs Global Participaes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Springs Global Parti 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 Springs Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Springs Global Parti has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Springs Global go up and down completely randomly.

Pair Corralation between Costco Wholesale and Springs Global

If you would invest  12,534  in Costco Wholesale on September 15, 2024 and sell it today you would earn a total of  2,504  from holding Costco Wholesale or generate 19.98% return on investment over 90 days.

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

Costco Wholesale  vs.  Springs Global Participaes

Costco Wholesale

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Costco Wholesale sustained solid returns over the last few months and may actually be approaching a breakup point.

Springs Global Parti

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Costco Wholesale and Springs Global

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

The idea behind Costco Wholesale and Springs Global Participaes 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..