Correlation Between Caribbean Utilities and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Caribbean Utilities and Costco Wholesale 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 Caribbean Utilities and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caribbean Utilities and Costco Wholesale Corp, you can compare the effects of market volatilities on Caribbean Utilities and Costco Wholesale 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 Caribbean Utilities with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caribbean Utilities and Costco Wholesale.
Diversification Opportunities for Caribbean Utilities and Costco Wholesale
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Caribbean and Costco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Caribbean Utilities and Costco Wholesale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale Corp and Caribbean Utilities 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 Caribbean Utilities are associated (or correlated) with Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale Corp has no effect on the direction of Caribbean Utilities i.e., Caribbean Utilities and Costco Wholesale go up and down completely randomly.
Pair Corralation between Caribbean Utilities and Costco Wholesale
Assuming the 90 days trading horizon Caribbean Utilities is expected to generate 1.16 times more return on investment than Costco Wholesale. However, Caribbean Utilities is 1.16 times more volatile than Costco Wholesale Corp. It trades about 0.12 of its potential returns per unit of risk. Costco Wholesale Corp is currently generating about -0.07 per unit of risk. If you would invest 1,370 in Caribbean Utilities on September 25, 2024 and sell it today you would earn a total of 30.00 from holding Caribbean Utilities or generate 2.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Caribbean Utilities vs. Costco Wholesale Corp
Performance |
Timeline |
Caribbean Utilities |
Costco Wholesale Corp |
Caribbean Utilities and Costco Wholesale Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Caribbean Utilities and Costco Wholesale
The main advantage of trading using opposite Caribbean Utilities and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caribbean Utilities position performs unexpectedly, Costco Wholesale 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.Caribbean Utilities vs. Maxim Power Corp | Caribbean Utilities vs. ATCO | Caribbean Utilities vs. Capstone Infrastructure Corp | Caribbean Utilities vs. Richards Packaging Income |
Costco Wholesale vs. Faction Investment Group | Costco Wholesale vs. Falcon Energy Materials | Costco Wholesale vs. Sangoma Technologies Corp | Costco Wholesale vs. Caribbean Utilities |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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