Correlation Between Costco Wholesale and BANK HANDLOWY

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

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

Diversification Opportunities for Costco Wholesale and BANK HANDLOWY

0.01

Correlation Coefficient

Costco Wholesale  BANK HANDLOWY

Significant diversification

The 3 months correlation between Costco and BANK is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY 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 BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and BANK HANDLOWY go up and down completely randomly.

Pair Corralation between Costco Wholesale and BANK HANDLOWY

Assuming the 90 days horizon Costco Wholesale is expected to under-perform the BANK HANDLOWY. In addition to that, Costco Wholesale is 2.23 times more volatile than BANK HANDLOWY. It trades about -0.05 of its total potential returns per unit of risk. BANK HANDLOWY is currently generating about 0.52 per unit of volatility. If you would invest  2,070  in BANK HANDLOWY on December 26, 2024 and sell it today you would earn a total of  670.00  from holding BANK HANDLOWY or generate 32.37% 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.  BANK HANDLOWY

Costco Wholesale

Risk-Adjusted Performance

Very Weak

Over the last 90 days Costco Wholesale has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Costco Wholesale is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

BANK HANDLOWY

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in BANK HANDLOWY are ranked lower than 40 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BANK HANDLOWY unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Costco Wholesale and BANK HANDLOWY

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

The idea behind Costco Wholesale and BANK HANDLOWY 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.