Correlation Between Grupo Carso and Costco Wholesale

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

By analyzing existing cross correlation between Grupo Carso SAB and Costco Wholesale, you can compare the effects of market volatilities on Grupo Carso 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 Grupo Carso with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Carso and Costco Wholesale.

Diversification Opportunities for Grupo Carso and Costco Wholesale

-0.32

Correlation Coefficient

Grupo Carso  Costco Wholesale

Very good diversification

The 3 months correlation between Grupo and Costco is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale and Grupo Carso 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 Grupo Carso SAB 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 has no effect on the direction of Grupo Carso i.e., Grupo Carso and Costco Wholesale go up and down completely randomly.

Pair Corralation between Grupo Carso and Costco Wholesale

Assuming the 90 days trading horizon Grupo Carso SAB is expected to under-perform the Costco Wholesale. In addition to that, Grupo Carso is 1.74 times more volatile than Costco Wholesale. It trades about -0.23 of its total potential returns per unit of risk. Costco Wholesale is currently generating about -0.3 per unit of volatility. If you would invest  1,995,500  in Costco Wholesale on October 8, 2024 and sell it today you would lose (102,799) from holding Costco Wholesale or give up 5.15% of portfolio value over 90 days.

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

Grupo Carso SAB  vs.  Costco Wholesale

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Costco Wholesale

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Costco Wholesale may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Grupo Carso and Costco Wholesale

The main advantage of trading using opposite Grupo Carso and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Carso 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.

The idea behind Grupo Carso SAB and Costco Wholesale 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.