Correlation Between Ross Stores and IXICO PLC
Can any of the company-specific risk be diversified away by investing in both Ross Stores and IXICO PLC 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 IXICO PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and IXICO PLC, you can compare the effects of market volatilities on Ross Stores and IXICO PLC 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 IXICO PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and IXICO PLC.
Diversification Opportunities for Ross Stores and IXICO PLC
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ross and IXICO is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and IXICO PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IXICO PLC 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 IXICO PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IXICO PLC has no effect on the direction of Ross Stores i.e., Ross Stores and IXICO PLC go up and down completely randomly.
Pair Corralation between Ross Stores and IXICO PLC
Assuming the 90 days trading horizon Ross Stores is expected to generate 0.43 times more return on investment than IXICO PLC. However, Ross Stores is 2.33 times less risky than IXICO PLC. It trades about 0.05 of its potential returns per unit of risk. IXICO PLC is currently generating about -0.03 per unit of risk. If you would invest 11,335 in Ross Stores on September 20, 2024 and sell it today you would earn a total of 3,810 from holding Ross Stores or generate 33.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 97.6% |
Values | Daily Returns |
Ross Stores vs. IXICO PLC
Performance |
Timeline |
Ross Stores |
IXICO PLC |
Ross Stores and IXICO PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ross Stores and IXICO PLC
The main advantage of trading using opposite Ross Stores and IXICO PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, IXICO PLC 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 IXICO PLC will offset losses from the drop in IXICO PLC's long position.Ross Stores vs. Samsung Electronics Co | Ross Stores vs. Samsung Electronics Co | Ross Stores vs. Hyundai Motor | Ross Stores vs. Reliance Industries Ltd |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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