Correlation Between Ross Stores and Universal Health
Can any of the company-specific risk be diversified away by investing in both Ross Stores and Universal Health 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 Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Universal Health Services, you can compare the effects of market volatilities on Ross Stores and Universal Health 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 Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Universal Health.
Diversification Opportunities for Ross Stores and Universal Health
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ross and Universal is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of Ross Stores i.e., Ross Stores and Universal Health go up and down completely randomly.
Pair Corralation between Ross Stores and Universal Health
Assuming the 90 days trading horizon Ross Stores is expected to generate 1.62 times less return on investment than Universal Health. But when comparing it to its historical volatility, Ross Stores is 1.43 times less risky than Universal Health. It trades about 0.05 of its potential returns per unit of risk. Universal Health Services is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 13,281 in Universal Health Services on September 4, 2024 and sell it today you would earn a total of 7,100 from holding Universal Health Services or generate 53.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 86.48% |
| Values | Daily Returns |
Ross Stores vs. Universal Health Services
Performance |
| Timeline |
| Ross Stores |
| Universal Health Services |
Ross Stores and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Universal Health
The main advantage of trading using opposite Ross Stores and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Universal Health 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 Universal Health will offset losses from the drop in Universal Health'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 |
| Universal Health vs. Samsung Electronics Co | Universal Health vs. Samsung Electronics Co | Universal Health vs. Hyundai Motor | Universal Health vs. Toyota Motor Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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