Correlation Between Rite Aid and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Rite Aid 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 Rite Aid and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rite Aid and Costco Wholesale Corp, you can compare the effects of market volatilities on Rite Aid 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 Rite Aid with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rite Aid and Costco Wholesale.
Diversification Opportunities for Rite Aid and Costco Wholesale
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rite and Costco is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Rite Aid 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 Rite Aid 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 Rite Aid 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 Rite Aid i.e., Rite Aid and Costco Wholesale go up and down completely randomly.
Pair Corralation between Rite Aid and Costco Wholesale
Considering the 90-day investment horizon Rite Aid is expected to under-perform the Costco Wholesale. In addition to that, Rite Aid is 6.12 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 0.08 per unit of volatility. If you would invest 45,554 in Costco Wholesale Corp on December 29, 2023 and sell it today you would earn a total of 27,371 from holding Costco Wholesale Corp or generate 60.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 84.84% |
Values | Daily Returns |
Rite Aid vs. Costco Wholesale Corp
Performance |
Timeline |
Rite Aid |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Costco Wholesale Corp |
Rite Aid and Costco Wholesale Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rite Aid and Costco Wholesale
The main advantage of trading using opposite Rite Aid and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rite Aid 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.Rite Aid vs. Beyond Inc | Rite Aid vs. RBC Bearings Incorporated | Rite Aid vs. National Vision Holdings | Rite Aid vs. Toro Co |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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