Correlation Between Costco Wholesale and Core Laboratories

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Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Core Laboratories 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 Core Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale and Core Laboratories NV, you can compare the effects of market volatilities on Costco Wholesale and Core Laboratories 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 Core Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Core Laboratories.

Diversification Opportunities for Costco Wholesale and Core Laboratories

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Costco and Core Laboratories is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and Core Laboratories NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Laboratories 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 are associated (or correlated) with Core Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Laboratories has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Core Laboratories go up and down completely randomly.

Pair Corralation between Costco Wholesale and Core Laboratories

Given the investment horizon of 90 days Costco Wholesale is expected to generate 1.04 times less return on investment than Core Laboratories. But when comparing it to its historical volatility, Costco Wholesale is 2.47 times less risky than Core Laboratories. It trades about 0.04 of its potential returns per unit of risk. Core Laboratories NV is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,583  in Core Laboratories NV on July 6, 2022 and sell it today you would lose (14.00)  from holding Core Laboratories NV or give up 0.88% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Costco Wholesale  vs.  Core Laboratories NV

 Performance (%) 
       Timeline  
Costco Wholesale 
Costco Performance
0 of 100
Over the last 90 days Costco Wholesale has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Costco Wholesale is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Costco Price Channel

Core Laboratories 
Core Laboratories Performance
0 of 100
Over the last 90 days Core Laboratories NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Core Laboratories Price Channel

Costco Wholesale and Core Laboratories Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Costco Wholesale and Core Laboratories

The main advantage of trading using opposite Costco Wholesale and Core Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale position performs unexpectedly, Core Laboratories 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 Core Laboratories will offset losses from the drop in Core Laboratories' long position.
Costco Wholesale vs. Amazon Inc
The idea behind Costco Wholesale and Core Laboratories NV 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.
Core Laboratories vs. Amazon Inc
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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