Correlation Between Computer Modelling and Costco Wholesale

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Can any of the company-specific risk be diversified away by investing in both Computer Modelling 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 Computer Modelling and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Computer Modelling Group and Costco Wholesale Corp, you can compare the effects of market volatilities on Computer Modelling 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 Computer Modelling with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Modelling and Costco Wholesale.

Diversification Opportunities for Computer Modelling and Costco Wholesale

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Computer and Costco is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Computer Modelling Group 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 Computer Modelling 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 Computer Modelling Group 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 Computer Modelling i.e., Computer Modelling and Costco Wholesale go up and down completely randomly.

Pair Corralation between Computer Modelling and Costco Wholesale

Assuming the 90 days trading horizon Computer Modelling Group is expected to under-perform the Costco Wholesale. In addition to that, Computer Modelling is 2.44 times more volatile than Costco Wholesale Corp. It trades about -0.02 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.16 per unit of volatility. If you would invest  4,117  in Costco Wholesale Corp on September 5, 2024 and sell it today you would earn a total of  472.00  from holding Costco Wholesale Corp or generate 11.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Computer Modelling Group  vs.  Costco Wholesale Corp

 Performance 
       Timeline  
Computer Modelling 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Computer Modelling Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Computer Modelling is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Costco Wholesale Corp 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Costco Wholesale may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Computer Modelling and Costco Wholesale Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Computer Modelling and Costco Wholesale

The main advantage of trading using opposite Computer Modelling and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Modelling 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 Computer Modelling Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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