Correlation Between Costco Wholesale and Amdocs

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

Diversification Opportunities for Costco Wholesale and Amdocs

0.69

Correlation Coefficient

Costco Wholesale  Amdocs

Poor diversification

The 3 months correlation between Costco and Amdocs is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and Amdocs Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amdocs Limited 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 Amdocs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amdocs Limited has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and Amdocs go up and down completely randomly.

Pair Corralation between Costco Wholesale and Amdocs

Assuming the 90 days trading horizon Costco Wholesale Corp is expected to under-perform the Amdocs. But the stock apears to be less risky and, when comparing its historical volatility, Costco Wholesale Corp is 1.28 times less risky than Amdocs. The stock trades about -0.13 of its potential returns per unit of risk. The Amdocs Limited is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  7,880  in Amdocs Limited on May 21, 2025 and sell it today you would lose (472.00) from holding Amdocs Limited or give up 5.99% of portfolio value over 90 days.

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

Costco Wholesale Corp  vs.  Amdocs Limited

Costco Wholesale Corp

Risk-Adjusted Performance

Weakest

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 latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Amdocs Limited

Risk-Adjusted Performance

Weakest

Over the last 90 days Amdocs Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Amdocs is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Costco Wholesale and Amdocs

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

The idea behind Costco Wholesale Corp and Amdocs Limited 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.