diversifiable risk of combining Generation Mining and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Generation Mining and Costco Wholesale Corp, you can compare the effects of market volatilities on Generation Mining 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 Generation Mining with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generation Mining and Costco Wholesale.
Diversification Opportunities for Generation Mining and Costco Wholesale
Pair Corralation between Generation Mining and Costco Wholesale
Assuming the 90 days trading horizon Generation Mining is expected to under-perform the Costco Wholesale. In addition to that, Generation Mining is 10.71 times more volatile than Costco Wholesale Corp. It trades about -0.03 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.41 per unit of volatility. If you would invest 3,337 in Costco Wholesale Corp on December 5, 2023 and sell it today you would earn a total of 176.00 from holding Costco Wholesale Corp or generate 5.27% return on investment over 90 days.
Generation Mining vs. Costco Wholesale Corp
Generation Mining and Costco Wholesale Volatility Contrast
Pair Trading with Generation Mining and Costco WholesaleThe main advantage of trading using opposite Generation Mining and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generation Mining 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 Generation Mining 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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