Correlation Between Costco Wholesale and Adaptive Biotechnologies

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

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

Diversification Opportunities for Costco Wholesale and Adaptive Biotechnologies

-0.07

Correlation Coefficient

Costco Wholesale  Adaptive Biotechnologies

Good diversification

The 3 months correlation between Costco and Adaptive is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Adaptive Biotechnologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaptive Biotechnologies and Costco Wholesale 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 Costco Wholesale Corp are associated (or correlated) with Adaptive Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaptive Biotechnologies has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Adaptive Biotechnologies go up and down completely randomly.

Pair Corralation between Costco Wholesale and Adaptive Biotechnologies

Given the investment horizon of 90 days Costco Wholesale Corp is expected to generate 0.24 times more return on investment than Adaptive Biotechnologies. However, Costco Wholesale Corp is 4.24 times less risky than Adaptive Biotechnologies. It trades about 0.13 of its potential returns per unit of risk. Adaptive Biotechnologies Corp is currently generating about -0.1 per unit of risk. If you would invest  54,794  in Costco Wholesale Corp on January 24, 2024 and sell it today you would earn a total of  16,752  from holding Costco Wholesale Corp or generate 30.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Costco Wholesale Corp  vs.  Adaptive Biotechnologies Corp

Costco Wholesale Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Costco Wholesale is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Adaptive Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adaptive Biotechnologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Costco Wholesale and Adaptive Biotechnologies

The main advantage of trading using opposite Costco Wholesale and Adaptive Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Adaptive Biotechnologies 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 Adaptive Biotechnologies will offset losses from the drop in Adaptive Biotechnologies' long position.

The idea behind Costco Wholesale Corp and Adaptive Biotechnologies 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.