Costco Stock Volatility

COST
 Stock
  

USD 480.32  5.81  1.20%   

Costco Wholesale secures Sharpe Ratio (or Efficiency) of -0.0198, which signifies that the company had -0.0198% of return per unit of risk over the last 3 months. Macroaxis standpoint towards foreseeing the risk of any stock is to look at both systematic and unsystematic factors of the business, including all available market data and technical indicators. Costco Wholesale exposes twenty-one different technical indicators, which can help you to evaluate volatility that cannot be diversified away. Please be advised to confirm Costco Wholesale mean deviation of 1.25, and Risk Adjusted Performance of (0.005942) to double-check the risk estimate we provide.
  
Costco Wholesale Stock volatility depicts how high the prices fluctuate around the mean (or its average) price. In other words, it is a statistical measure of the distribution of Costco daily returns, and it is calculated using variance and standard deviation. We also use Costco's beta, its sensitivity to the market, as well as its odds of financial distress to provide a more practical estimation of Costco Wholesale volatility.

180 Days Market Risk

Very steady

Chance of Distress

Very Low

180 Days Economic Sensitivity

Almost mirrors the market
Since volatility provides investors with entry points to take advantage of stock prices, companies, such as Costco Wholesale can benefit from it. Downward market volatility can be a perfect environment for investors who play the long game. Here, they may decide to buy additional stocks of Costco Wholesale at lower prices. For example, an investor can purchase Costco stock that has halved in price over a short period. This will lower your average cost per share, thereby improving your portfolio's performance when the markets normalize. Similarly, when the prices of Costco Wholesale's stock rises, investors can sell out and invest the proceeds in other equities with better opportunities. Investing when markets are volatile with better valuations will accord both investors and companies the opportunity to generate better long-term returns.

Moving together with Costco Wholesale

+0.74TGTTarget CorpPairCorr
+0.69DLMAFDollaramaPairCorr

Moving against Costco Wholesale

-0.52PTBRYPt Bank NegaraPairCorr

Costco Wholesale Market Sensitivity And Downside Risk

Costco Wholesale's beta coefficient measures the volatility of Costco stock compared to the systematic risk of the entire stock market represented by your selected benchmark. In mathematical terms, beta represents the slope of the line through a regression of data points where each of these points represents Costco stock's returns against your selected market. In other words, Costco Wholesale's beta of 0.96 provides an investor with an approximation of how much risk Costco Wholesale stock can potentially add to one of your existing portfolios.
Costco Wholesale exhibits very low volatility with skewness of -0.62 and kurtosis of 1.45. However, we advise investors to further study Costco Wholesale technical indicators to ensure that all market info is available and is reliable. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Costco Wholesale's stock risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact Costco Wholesale's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.
3 Months Beta |Analyze Costco Wholesale Demand Trend
Check current 90 days Costco Wholesale correlation with market (DOW)

Costco Beta

    
  0.96  
Costco standard deviation measures the daily dispersion of prices over your selected time horizon relative to its mean. Typical volatile equity has a high standard deviation, while the deviation of a stable instrument is usually low. As a downside, the standard deviation calculates all uncertainty as risk, even when it is in your favor, such as above-average returns.

Standard Deviation

    
  1.67  
It is essential to understand the difference between upside risk (as represented by Costco Wholesale's standard deviation) and the downside risk, which can be measured by semi-deviation or downside deviation of Costco Wholesale's daily returns or price. Since the actual investment returns on holding a position in costco stock tend to have a non-normal distribution, there will be different probabilities for losses than for gains. The likelihood of losses is reflected in the downside risk of an investment in Costco Wholesale.

Using Costco Put Option to Manage Risk

Put options written on Costco Wholesale grant holders of the option the right to sell a specified amount of Costco Wholesale at a specified price within a specified time frame. The put buyer has a limited loss and, while not fully unlimited gains, as the price of Costco Stock cannot fall below zero, the put buyer does gain as the price drops. So, one way investors can hedge Costco Wholesale's position is by buying a put option against it. The put option used this way is usually referred to as insurance. If an undesired outcome occurs and loss on holding Costco Wholesale will be realized, the loss incurred will be offset by the profits made with the option trade.

Costco Wholesale's PUT expiring on 2022-10-07

   Profit   
Share
       Costco Wholesale Price At Expiration  

Current Costco Wholesale Insurance Chain

DeltaGammaOpen IntExpirationCurrent SpreadLast Price
Put
2022-10-07 PUT at $535.0-0.89820.004572022-10-0751.8 - 56.545.84View
Put
2022-10-07 PUT at $530.0-0.87760.005292022-10-0747.0 - 51.9553.98View
Put
2022-10-07 PUT at $527.5-0.9820.002112022-10-0745.05 - 49.5552.5View
Put
2022-10-07 PUT at $525.0-0.98410.002732022-10-0743.0 - 46.5549.85View
Put
2022-10-07 PUT at $520.0-0.8640.006572022-10-0737.1 - 41.933.7View
Put
2022-10-07 PUT at $515.0-0.84890.007592022-10-0732.0 - 37.0537.31View
Put
2022-10-07 PUT at $512.5-0.96730.004482022-10-0730.55 - 34.234.79View
Put
2022-10-07 PUT at $510.0-0.85020.0086132022-10-0727.2 - 31.730.33View
Put
2022-10-07 PUT at $507.5-0.94990.006572022-10-0725.6 - 29.427.49View
Put
2022-10-07 PUT at $505.0-0.95120.007902022-10-0723.4 - 26.528.95View
Put
2022-10-07 PUT at $502.5-0.91360.01392022-10-0721.5 - 24.0524.2View
View All Costco Wholesale Options

Costco Wholesale Stock Volatility Analysis

Volatility refers to the frequency at which Costco Wholesale stock price increases or decreases within a specified period. These fluctuations usually indicate the level of risk that's associated with Costco Wholesale's price changes. Investors will then calculate the volatility of Costco Wholesale's stock to predict their future moves. A stock that has erratic price changes quickly hits new highs, and lows are considered highly volatile. A stock with relatively stable price changes has low volatility. A highly volatile stock is riskier, but the risk cuts both ways. Investing in highly volatile security can either be highly successful, or you may experience significant failure. There are two main types of Costco Wholesale's volatility:

Historical Volatility

This type of stock volatility measures Costco Wholesale's fluctuations based on previous trends. It's commonly used to predict Costco Wholesale's future behavior based on its past. However, it cannot conclusively determine the future direction of the stock.

Implied Volatility

This type of volatility provides a positive outlook on future price fluctuations for Costco Wholesale's current market price. This means that the stock will return to its initially predicted market price. This type of volatility can be derived from derivative instruments written on Costco Wholesale's to be redeemed at a future date.
Transformation
The output start index for this execution was zero with a total number of output elements of sixty-one. The Median Price line plots median indexes of Costco Wholesale price series.
.

Costco Wholesale Projected Return Density Against Market

Given the investment horizon of 90 days Costco Wholesale has a beta of 0.9635 suggesting Costco Wholesale market returns are related to returns on the market. As the market goes up or down, Costco Wholesale is expected to follow.
Most traded equities are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or company-specific) risk. Unsystematic risk is the risk that events specific to Costco Wholesale or Consumer Defensive sector will adversely affect the stock's price. This type of risk can be diversified away by owning several different stocks in different industries whose stock prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that Costco Wholesale's price will be affected by overall stock market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a Costco stock's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision.
The company has an alpha of 0.0142, implying that it can generate a 0.0142 percent excess return over DOW after adjusting for the inherited market risk (beta).
   Predicted Return Density   
       Returns  
Costco Wholesale's volatility is measured either by using standard deviation or beta. Standard deviation will reflect the average amount of how costco stock's price will differ from the mean after some time.To get its calculation, you should first determine the mean price during the specified period then subtract that from each price point.

What Drives a Costco Wholesale Price Volatility?

Several factors can influence a Stock's stock volatility:

Industry

Specific events can influence volatility within a particular industry. For instance, a significant weather upheaval in a crucial oil-production site may cause oil prices to increase in the oil sector. The direct result will be the rise in the stock price of oil distribution companies. Similarly, any government regulation in a specific industry could negatively influence stock prices due to increased regulations on compliance that may impact the company's future earnings and growth.

Political and Economic environment

When governments make significant decisions regarding trade agreements, policies, and legislation regarding specific industries, they will influence stock prices. Everything from speeches to elections may influence investors, who can directly influence the stock prices in any particular industry. The prevailing economic situation also plays a significant role in stock prices. When the economy is doing well, investors will have a positive reaction and hence, better stock prices and vice versa.

The Company's Performance

Sometimes volatility will only affect an individual company. For example, a revolutionary product launch or strong earnings report may attract many investors to purchase the company. This positive attention will raise the company's stock price. In contrast, product recalls and data breaches may negatively influence a company's stock prices.

Costco Wholesale Stock Risk Measures

Most traded equities are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or company-specific) risk. Unsystematic risk is the risk that events specific to Costco Wholesale or Consumer Defensive sector will adversely affect the stock's price. This type of risk can be diversified away by owning several different stocks in different industries whose stock prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that Costco Wholesale's price will be affected by overall stock market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a Costco stock's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision. Given the investment horizon of 90 days the coefficient of variation of Costco Wholesale is -5044.33. The daily returns are distributed with a variance of 2.78 and standard deviation of 1.67. The mean deviation of Costco Wholesale is currently at 1.27. For similar time horizon, the selected benchmark (DOW) has volatility of 1.23
α
Alpha over DOW
0.0142
β
Beta against DOW0.96
σ
Overall volatility
1.67
Ir
Information ratio 0.0094

Costco Wholesale Stock Return Volatility

Costco Wholesale historical daily return volatility represents how much of Costco Wholesale stock's daily returns swing around its mean - it is a statistical measure of its dispersion of returns. The firm inherits 1.6685% risk (volatility on return distribution) over the 90 days horizon. By contrast, DOW inherits 1.2394% risk (volatility on return distribution) over the 90 days horizon.
 Performance (%) 
       Timeline  

About Costco Wholesale Volatility

Volatility is a rate at which the price of Costco Wholesale or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Costco Wholesale may increase or decrease. In other words, similar to Costco's beta indicator, it measures the risk of Costco Wholesale and helps estimate the fluctuations that may happen in a short period of time. So if prices of Costco Wholesale fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.
Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Korea, Australia, Spain, France, Iceland, China, and Taiwan. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington. Costco Wholesale operates under Discount Stores classification in the United States and is traded on NASDAQ Exchange. It employs 288000 people.

Costco Wholesale Investment Opportunity

Costco Wholesale has a volatility of 1.67 and is 1.35 times more volatile than DOW. 14  of all equities and portfolios are less risky than Costco Wholesale. Compared to the overall equity markets, volatility of historical daily returns of Costco Wholesale is lower than 14 () of all global equities and portfolios over the last 90 days. Use Costco Wholesale to protect your portfolios against small market fluctuations. Benchmarks are essential to demonstrate the utility of optimization algorithms. The stock experiences a somewhat bearish sentiment, but the market may correct it shortly. Check odds of Costco Wholesale to be traded at $465.91 in 90 days.

Poor diversification

The correlation between Costco Wholesale and DJI is 0.72 (i.e., Poor diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and DJI in the same portfolio, assuming nothing else is changed.

Costco Wholesale Additional Risk Indicators

The analysis of Costco Wholesale's secondary risk indicators is one of the essential steps in making a buy or sell decision. The process involves identifying the amount of risk involved in Costco Wholesale's investment and either accepting that risk or mitigating it. Along with some common measures of Costco Wholesale stock's risk such as standard deviation, beta, or value at risk, we also provide a set of secondary indicators that can assist in the individual investment decision or help in hedging the risk of your existing portfolios.
Please note, the risk measures we provide can be used independently or collectively to perform a risk assessment. When comparing two potential stocks, we recommend comparing similar stocks with homogenous growth potential and valuation from related markets to determine which investment holds the most risk.

Costco Wholesale Suggested Diversification Pairs

Pair trading is one of the very effective strategies used by professional day traders and hedge funds capitalizing on short-time and mid-term market inefficiencies. The approach is based on the fact that the ratio of prices of two correlating shares is long-term stable and oscillates around the average value. If the correlation ratio comes outside the common area, you can speculate with a high success rate that the ratio will return to the mean value and collect a profit.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Costco Wholesale as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Costco Wholesale's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Costco Wholesale's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Costco Wholesale.
Continue to Trending Equities. You can also try Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

Complementary Tools for analysis

When running Costco Wholesale price analysis, check to measure Costco Wholesale's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Costco Wholesale is operating at the current time. Most of Costco Wholesale's value examination focuses on studying past and present price action to predict the probability of Costco Wholesale's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move Costco Wholesale's price. Additionally, you may evaluate how the addition of Costco Wholesale to your portfolios can decrease your overall portfolio volatility.
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Go
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
ETF Directory
Find actively traded Exchange Traded Funds (ETF) from around the world
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Is Costco Wholesale's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Costco Wholesale. If investors know Costco will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Costco Wholesale listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of Costco Wholesale is measured differently than its book value, which is the value of Costco that is recorded on the company's balance sheet. Investors also form their own opinion of Costco Wholesale's value that differs from its market value or its book value, called intrinsic value, which is Costco Wholesale's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Costco Wholesale's market value can be influenced by many factors that don't directly affect Costco Wholesale's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Costco Wholesale's value and its price as these two are different measures arrived at by different means. Investors typically determine Costco Wholesale value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Costco Wholesale's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.