Correlation Between Chia and Costco Wholesale

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

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

Diversification Opportunities for Chia and Costco Wholesale

-0.54

Correlation Coefficient

Chia  Costco Wholesale

Excellent diversification

The 3 months correlation between Chia and Costco is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chia 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 Chia 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 Chia 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 Chia i.e., Chia and Costco Wholesale go up and down completely randomly.

Pair Corralation between Chia and Costco Wholesale

Assuming the 90 days trading horizon Chia is expected to under-perform the Costco Wholesale. In addition to that, Chia is 3.89 times more volatile than Costco Wholesale Corp. It trades about -0.12 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about -0.04 per unit of volatility. If you would invest  94,647  in Costco Wholesale Corp on December 21, 2024 and sell it today you would lose (4,847) from holding Costco Wholesale Corp or give up 5.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Chia  vs.  Costco Wholesale Corp

Chia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Chia shareholders.

Costco Wholesale Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Chia and Costco Wholesale

The main advantage of trading using opposite Chia and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia 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 Chia and Costco Wholesale Corp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.