Correlation Between Costco Wholesale and SOEDER SPORTFISKE

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

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

Diversification Opportunities for Costco Wholesale and SOEDER SPORTFISKE

-0.4

Correlation Coefficient

Costco Wholesale  SOEDER SPORTFISKE

Very good diversification

The 3 months correlation between Costco and SOEDER is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and SOEDER SPORTFISKE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOEDER SPORTFISKE 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 Corp are associated (or correlated) with SOEDER SPORTFISKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOEDER SPORTFISKE has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and SOEDER SPORTFISKE go up and down completely randomly.

Pair Corralation between Costco Wholesale and SOEDER SPORTFISKE

Assuming the 90 days trading horizon Costco Wholesale is expected to generate 1.26 times less return on investment than SOEDER SPORTFISKE. But when comparing it to its historical volatility, Costco Wholesale Corp is 2.3 times less risky than SOEDER SPORTFISKE. It trades about 0.13 of its potential returns per unit of risk. SOEDER SPORTFISKE AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  240.00  in SOEDER SPORTFISKE AB on October 25, 2024 and sell it today you would earn a total of  25.00  from holding SOEDER SPORTFISKE AB or generate 10.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Costco Wholesale Corp  vs.  SOEDER SPORTFISKE AB

Costco Wholesale Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Costco Wholesale may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SOEDER SPORTFISKE

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOEDER SPORTFISKE AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SOEDER SPORTFISKE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Costco Wholesale and SOEDER SPORTFISKE

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

The idea behind Costco Wholesale Corp and SOEDER SPORTFISKE AB 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.