Costco shares show negative beta and low index correlation over past year

Costco Wholesale (COST) shares recorded a beta of -0.14 and a daily correlation of -0.09 with the S&P 500 over the twelve months to October 14, 2026, indicating the stock moved inversely to the index with almost no linear relationship. This statistical decoupling occurred while the retailer's underlying business metrics showed accelerated growth, with revenue rising 10.1% in the twelve months to August 2026, up from 8.2% growth a year earlier.

The divergence between the stock's price action and the broader market is evident in specific daily performance data. On the S&P 500's average down day over the past year, where the index lost 0.585%, a $10,000 holding in Costco increased in value by approximately $3.68. Conversely, on the index's average up day, when the S&P 500 gained 0.641%, the same Costco holding added only $1.84. These figures demonstrate that Costco shares did not track wider market moves during this period.

Despite the low correlation, Costco's price volatility remained higher than that of the broader market. The retailer's twelve-month volatility stood at 19.9%, compared to 12.7% for the S&P 500. This suggests that while Costco may not amplify market downturns, it introduces its own distinct price swings independent of index movements.

Longer-term data reveals a different relationship between Costco and the S&P 500. Over the five years to October 14, 2026, the correlation between the two was 0.51, indicating a moderate positive link that has since eroded to near zero in the most recent year. During that five-year period, Costco generated an annual return of 18.0% with dividends included, outpacing the S&P 500's 13.1% annual return. However, this higher return came with greater risk, as Costco's five-year annual volatility was 23.0%, compared to 17.0% for the index.

Risk-adjusted performance metrics show a narrow margin between the two investments over the five-year span. Costco holders earned approximately 0.78 points of return for each point of volatility, slightly exceeding the 0.77 points earned by S&P 500 holders. The retailer's operational performance supports its current valuation context, with twelve-month operating margins reaching 3.9%, a level described as the highest at any fiscal quarter end in data available back to fiscal Q1 2017.

Recent sales data indicates continued momentum in the company's core business. Net sales for the retail month of September rose 13.0% from a year earlier. The combination of record operating margins and accelerating revenue growth contrasts with the stock's recent statistical disconnection from broader market indices.