Correlation Between IMetal Resources and Costco Wholesale

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

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

Diversification Opportunities for IMetal Resources and Costco Wholesale

-0.11

Correlation Coefficient

IMetal Resources  Costco Wholesale

Good diversification

The 3 months correlation between IMetal and Costco is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding iMetal Resources 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 IMetal Resources 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 iMetal Resources 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 IMetal Resources i.e., IMetal Resources and Costco Wholesale go up and down completely randomly.

Pair Corralation between IMetal Resources and Costco Wholesale

Assuming the 90 days horizon iMetal Resources is expected to under-perform the Costco Wholesale. In addition to that, IMetal Resources is 4.66 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 0.13 per unit of volatility. If you would invest  4,144  in Costco Wholesale Corp on September 4, 2024 and sell it today you would earn a total of  380.00  from holding Costco Wholesale Corp or generate 9.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

iMetal Resources  vs.  Costco Wholesale Corp

iMetal Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iMetal Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IMetal Resources is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Costco Wholesale Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Costco Wholesale may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IMetal Resources and Costco Wholesale

The main advantage of trading using opposite IMetal Resources and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMetal Resources 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 iMetal Resources 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.