Correlation Between METTLER TOLEDO and Costco Wholesale

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

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

Diversification Opportunities for METTLER TOLEDO and Costco Wholesale

-0.68

Correlation Coefficient

METTLER TOLEDO  Costco Wholesale

Excellent diversification

The 3 months correlation between METTLER and Costco is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding METTLER TOLEDO INTL 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 METTLER TOLEDO 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 METTLER TOLEDO INTL 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 METTLER TOLEDO i.e., METTLER TOLEDO and Costco Wholesale go up and down completely randomly.

Pair Corralation between METTLER TOLEDO and Costco Wholesale

Assuming the 90 days trading horizon METTLER TOLEDO INTL is expected to under-perform the Costco Wholesale. In addition to that, METTLER TOLEDO is 1.5 times more volatile than Costco Wholesale Corp. It trades about -0.06 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.17 per unit of volatility. If you would invest  80,124  in Costco Wholesale Corp on August 30, 2024 and sell it today you would earn a total of  11,246  from holding Costco Wholesale Corp or generate 14.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

METTLER TOLEDO INTL  vs.  Costco Wholesale Corp

METTLER TOLEDO INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METTLER TOLEDO INTL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the 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 Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Costco Wholesale displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with METTLER TOLEDO and Costco Wholesale

The main advantage of trading using opposite METTLER TOLEDO and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METTLER TOLEDO 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 METTLER TOLEDO INTL 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..