Correlation Between SPARTAN STORES and COSTCO WHOLESALE

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

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

Diversification Opportunities for SPARTAN STORES and COSTCO WHOLESALE

0.72

Correlation Coefficient

SPARTAN STORES  COSTCO WHOLESALE

Poor diversification

The 3 months correlation between SPARTAN and COSTCO is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SPARTAN STORES and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR and SPARTAN STORES 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 SPARTAN STORES 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 CDR has no effect on the direction of SPARTAN STORES i.e., SPARTAN STORES and COSTCO WHOLESALE go up and down completely randomly.

Pair Corralation between SPARTAN STORES and COSTCO WHOLESALE

Assuming the 90 days trading horizon SPARTAN STORES is expected to under-perform the COSTCO WHOLESALE. In addition to that, SPARTAN STORES is 1.21 times more volatile than COSTCO WHOLESALE CDR. It trades about 0.0 of its total potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.1 per unit of volatility. If you would invest  1,465  in COSTCO WHOLESALE CDR on December 3, 2024 and sell it today you would earn a total of  1,655  from holding COSTCO WHOLESALE CDR or generate 112.97% return on investment over 90 days.

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

SPARTAN STORES  vs.  COSTCO WHOLESALE CDR

SPARTAN STORES

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPARTAN STORES are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward-looking indicators, SPARTAN STORES may actually be approaching a critical reversion point that can send shares even higher in April 2025.

COSTCO WHOLESALE CDR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COSTCO WHOLESALE CDR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with SPARTAN STORES and COSTCO WHOLESALE

The main advantage of trading using opposite SPARTAN STORES and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPARTAN STORES 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 SPARTAN STORES and COSTCO WHOLESALE CDR 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 Commodity Directory module to find actively traded commodities issued by global exchanges.