Correlation Between Costco Wholesale and Impax Asset

Can any of the company-specific risk be diversified away by investing in both Costco Wholesale and Impax Asset 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 Impax Asset 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 Impax Asset Management, you can compare the effects of market volatilities on Costco Wholesale and Impax Asset 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 Impax Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Impax Asset.

Diversification Opportunities for Costco Wholesale and Impax Asset

-0.15

Correlation Coefficient

Costco Wholesale  Impax Asset

Good diversification

The 3 months correlation between Costco and Impax is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Impax Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impax Asset Management 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 Impax Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impax Asset Management has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Impax Asset go up and down completely randomly.

Pair Corralation between Costco Wholesale and Impax Asset

Assuming the 90 days trading horizon Costco Wholesale Corp is expected to under-perform the Impax Asset. But the stock apears to be less risky and, when comparing its historical volatility, Costco Wholesale Corp is 2.31 times less risky than Impax Asset. The stock trades about -0.03 of its potential returns per unit of risk. The Impax Asset Management is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  13,550  in Impax Asset Management on April 24, 2025 and sell it today you would earn a total of  7,150  from holding Impax Asset Management or generate 52.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Costco Wholesale Corp  vs.  Impax Asset Management

Costco Wholesale Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Costco Wholesale Corp 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.

Impax Asset Management

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Impax Asset Management are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Impax Asset exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Costco Wholesale and Impax Asset

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

The idea behind Costco Wholesale Corp and Impax Asset Management 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.