Correlation Between Costco Wholesale and United States
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and United States 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 United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale and United States Steel, you can compare the effects of market volatilities on Costco Wholesale and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and United States.
Diversification Opportunities for Costco Wholesale and United States
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Costco and United is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and United States go up and down completely randomly.
Pair Corralation between Costco Wholesale and United States
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 0.61 times more return on investment than United States. However, Costco Wholesale is 1.65 times less risky than United States. It trades about 0.2 of its potential returns per unit of risk. United States Steel is currently generating about -0.29 per unit of risk. If you would invest 13,830 in Costco Wholesale on September 26, 2024 and sell it today you would earn a total of 1,039 from holding Costco Wholesale or generate 7.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Costco Wholesale vs. United States Steel
Performance |
Timeline |
Costco Wholesale |
United States Steel |
Costco Wholesale and United States Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Costco Wholesale and United States
The main advantage of trading using opposite Costco Wholesale and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.Costco Wholesale vs. Lupatech SA | Costco Wholesale vs. Bank of America | Costco Wholesale vs. Verizon Communications | Costco Wholesale vs. Capital One Financial |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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