Correlation Between Costco Wholesale and Applied Materials,

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

Diversification Opportunities for Costco Wholesale and Applied Materials,

-0.49

Correlation Coefficient

Costco Wholesale  Applied Materials,

Very good diversification

The 3 months correlation between Costco and Applied is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Applied Materials, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials, 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 Applied Materials,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials, has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Applied Materials, go up and down completely randomly.

Pair Corralation between Costco Wholesale and Applied Materials,

Assuming the 90 days trading horizon Costco Wholesale Corp is expected to under-perform the Applied Materials,. But the stock apears to be less risky and, when comparing its historical volatility, Costco Wholesale Corp is 2.11 times less risky than Applied Materials,. The stock trades about -0.06 of its potential returns per unit of risk. The Applied Materials, is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,717  in Applied Materials, on April 25, 2025 and sell it today you would earn a total of  415.00  from holding Applied Materials, or generate 24.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Costco Wholesale Corp  vs.  Applied Materials,

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 rather sound technical and fundamental indicators, Costco Wholesale is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Applied Materials,

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials, are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Applied Materials, exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Costco Wholesale and Applied Materials,

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

The idea behind Costco Wholesale Corp and Applied Materials, 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.