Correlation Between Ross Stores and Markel Corp
Can any of the company-specific risk be diversified away by investing in both Ross Stores and Markel Corp 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 Ross Stores and Markel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Markel Corp, you can compare the effects of market volatilities on Ross Stores and Markel Corp 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 Ross Stores with a short position of Markel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Markel Corp.
Diversification Opportunities for Ross Stores and Markel Corp
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ross and Markel is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Markel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel Corp and Ross Stores 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 Ross Stores are associated (or correlated) with Markel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markel Corp has no effect on the direction of Ross Stores i.e., Ross Stores and Markel Corp go up and down completely randomly.
Pair Corralation between Ross Stores and Markel Corp
Assuming the 90 days trading horizon Ross Stores is expected to generate 0.97 times more return on investment than Markel Corp. However, Ross Stores is 1.03 times less risky than Markel Corp. It trades about 0.09 of its potential returns per unit of risk. Markel Corp is currently generating about 0.06 per unit of risk. If you would invest 10,469 in Ross Stores on September 2, 2024 and sell it today you would earn a total of 5,031 from holding Ross Stores or generate 48.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.59% |
| Values | Daily Returns |
Ross Stores vs. Markel Corp
Performance |
| Timeline |
| Ross Stores |
| Markel Corp |
Ross Stores and Markel Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Markel Corp
The main advantage of trading using opposite Ross Stores and Markel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Markel Corp 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 Markel Corp will offset losses from the drop in Markel Corp's long position.| Ross Stores vs. Uniper SE | Ross Stores vs. Mulberry Group PLC | Ross Stores vs. London Security Plc | Ross Stores vs. Triad Group PLC |
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Check out your portfolio center.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.
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