Correlation Between Ross Stores and IXICO PLC

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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 Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy97.6%
ValuesDaily Returns

Ross Stores  vs.  IXICO PLC

 Performance 
       Timeline  
Ross Stores 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ross Stores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ross Stores is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
IXICO PLC 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in IXICO PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, IXICO PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind Ross Stores and IXICO PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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