Correlation Between Costco Wholesale and ATI AirTest

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

Diversification Opportunities for Costco Wholesale and ATI AirTest

-0.68

Correlation Coefficient

Costco Wholesale  ATI AirTest

Excellent diversification

The 3 months correlation between Costco and ATI is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and ATI AirTest Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATI AirTest Technologies 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 ATI AirTest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATI AirTest Technologies has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and ATI AirTest go up and down completely randomly.

Pair Corralation between Costco Wholesale and ATI AirTest

Assuming the 90 days trading horizon Costco Wholesale is expected to generate 2.37 times less return on investment than ATI AirTest. But when comparing it to its historical volatility, Costco Wholesale Corp is 13.43 times less risky than ATI AirTest. It trades about 0.39 of its potential returns per unit of risk. ATI AirTest Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2.00  in ATI AirTest Technologies on March 7, 2024 and sell it today you would earn a total of  0.00  from holding ATI AirTest Technologies or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Costco Wholesale Corp  vs.  ATI AirTest Technologies

Costco Wholesale Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Costco Wholesale is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

ATI AirTest Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ATI AirTest Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, ATI AirTest showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Costco Wholesale and ATI AirTest

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

The idea behind Costco Wholesale Corp and ATI AirTest Technologies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.