Correlation Between Costco Wholesale and Forsys Metals

Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Forsys Metals 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 Forsys Metals 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 Forsys Metals Corp, you can compare the effects of market volatilities on Costco Wholesale and Forsys Metals 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 Forsys Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Forsys Metals.

Diversification Opportunities for Costco Wholesale and Forsys Metals

-0.04

Correlation Coefficient

Costco Wholesale  Forsys Metals

Good diversification

The 3 months correlation between Costco and Forsys is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Forsys Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forsys Metals Corp 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 Forsys Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forsys Metals Corp has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Forsys Metals go up and down completely randomly.

Pair Corralation between Costco Wholesale and Forsys Metals

Assuming the 90 days trading horizon Costco Wholesale is expected to generate 15.03 times less return on investment than Forsys Metals. But when comparing it to its historical volatility, Costco Wholesale Corp is 5.21 times less risky than Forsys Metals. It trades about 0.06 of its potential returns per unit of risk. Forsys Metals Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  37.00  in Forsys Metals Corp on October 22, 2024 and sell it today you would earn a total of  5.00  from holding Forsys Metals Corp or generate 13.51% return on investment over 90 days.

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

Costco Wholesale Corp  vs.  Forsys Metals Corp

Costco Wholesale Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 12 (%) 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.

Forsys Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Costco Wholesale and Forsys Metals

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

The idea behind Costco Wholesale Corp and Forsys Metals Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.