Correlation Between Ross Stores and Teradata Corp
Can any of the company-specific risk be diversified away by investing in both Ross Stores and Teradata 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 Teradata 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 Teradata Corp, you can compare the effects of market volatilities on Ross Stores and Teradata 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 Teradata Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Teradata Corp.
Diversification Opportunities for Ross Stores and Teradata Corp
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ross and Teradata is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata 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 Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of Ross Stores i.e., Ross Stores and Teradata Corp go up and down completely randomly.
Pair Corralation between Ross Stores and Teradata Corp
Assuming the 90 days trading horizon Ross Stores is expected to generate 0.45 times more return on investment than Teradata Corp. However, Ross Stores is 2.23 times less risky than Teradata Corp. It trades about 0.32 of its potential returns per unit of risk. Teradata Corp is currently generating about -0.06 per unit of risk. If you would invest 13,951 in Ross Stores on September 4, 2024 and sell it today you would earn a total of 1,696 from holding Ross Stores or generate 12.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ross Stores vs. Teradata Corp
Performance |
| Timeline |
| Ross Stores |
| Teradata Corp |
Ross Stores and Teradata Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Teradata Corp
The main advantage of trading using opposite Ross Stores and Teradata Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Teradata 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 Teradata Corp will offset losses from the drop in Teradata Corp's long position.| Ross Stores vs. Samsung Electronics Co | Ross Stores vs. Samsung Electronics Co | Ross Stores vs. Hyundai Motor | Ross Stores vs. Toyota Motor Corp |
| Teradata Corp vs. Vulcan Materials Co | Teradata Corp vs. Ross Stores | Teradata Corp vs. United Utilities Group | Teradata Corp vs. PureTech Health plc |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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