Correlation Between COSTCO WHOLESALE and PICKN PAY

Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and PICKN PAY 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 PICKN PAY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COSTCO WHOLESALE CDR and PICKN PAY STORES, you can compare the effects of market volatilities on COSTCO WHOLESALE and PICKN PAY 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 PICKN PAY. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and PICKN PAY.

Diversification Opportunities for COSTCO WHOLESALE and PICKN PAY

0.3

Correlation Coefficient

COSTCO WHOLESALE  PICKN PAY

Weak diversification

The 3 months correlation between COSTCO and PICKN is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and PICKN PAY STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PICKN PAY STORES 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 CDR are associated (or correlated) with PICKN PAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PICKN PAY STORES has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and PICKN PAY go up and down completely randomly.

Pair Corralation between COSTCO WHOLESALE and PICKN PAY

Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 0.77 times more return on investment than PICKN PAY. However, COSTCO WHOLESALE CDR is 1.29 times less risky than PICKN PAY. It trades about -0.04 of its potential returns per unit of risk. PICKN PAY STORES is currently generating about -0.04 per unit of risk. If you would invest  2,877  in COSTCO WHOLESALE CDR on December 27, 2024 and sell it today you would lose (197.00) from holding COSTCO WHOLESALE CDR or give up 6.85% of portfolio value over 90 days.

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

COSTCO WHOLESALE CDR  vs.  PICKN PAY STORES

COSTCO WHOLESALE CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days COSTCO WHOLESALE CDR 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

PICKN PAY STORES

Risk-Adjusted Performance

Very Weak

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

Pair Trading with COSTCO WHOLESALE and PICKN PAY

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

The idea behind COSTCO WHOLESALE CDR and PICKN PAY STORES 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..