Correlation Between Recrusul and Costco Wholesale

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

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

Diversification Opportunities for Recrusul and Costco Wholesale

0.05

Correlation Coefficient

Recrusul  Costco Wholesale

Significant diversification

The 3 months correlation between Recrusul and Costco is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Recrusul SA and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale and Recrusul 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 Recrusul SA 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 Recrusul i.e., Recrusul and Costco Wholesale go up and down completely randomly.

Pair Corralation between Recrusul and Costco Wholesale

Assuming the 90 days trading horizon Recrusul SA is expected to under-perform the Costco Wholesale. In addition to that, Recrusul is 2.86 times more volatile than Costco Wholesale. It trades about -0.62 of its total potential returns per unit of risk. Costco Wholesale is currently generating about -0.11 per unit of volatility. If you would invest  14,901  in Costco Wholesale on October 10, 2024 and sell it today you would lose (702.00) from holding Costco Wholesale or give up 4.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Recrusul SA  vs.  Costco Wholesale

Recrusul SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Recrusul SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Costco Wholesale

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Costco Wholesale sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Recrusul and Costco Wholesale

The main advantage of trading using opposite Recrusul and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Recrusul 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 Recrusul SA 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.