Correlation Between Ross Stores and South32
Can any of the company-specific risk be diversified away by investing in both Ross Stores and South32 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 South32 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and South32, you can compare the effects of market volatilities on Ross Stores and South32 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 South32. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and South32.
Diversification Opportunities for Ross Stores and South32
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ross and South32 is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and South32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South32 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 South32. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South32 has no effect on the direction of Ross Stores i.e., Ross Stores and South32 go up and down completely randomly.
Pair Corralation between Ross Stores and South32
Assuming the 90 days trading horizon Ross Stores is expected to generate 0.78 times more return on investment than South32. However, Ross Stores is 1.29 times less risky than South32. It trades about 0.27 of its potential returns per unit of risk. South32 is currently generating about -0.01 per unit of risk. If you would invest 13,951 in Ross Stores on September 5, 2024 and sell it today you would earn a total of 1,483 from holding Ross Stores or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. South32
Performance |
| Timeline |
| Ross Stores |
| South32 |
Ross Stores and South32 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and South32
The main advantage of trading using opposite Ross Stores and South32 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, South32 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 South32 will offset losses from the drop in South32'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 |
| South32 vs. Ross Stores | South32 vs. Regions Financial Corp | South32 vs. Ameriprise Financial | South32 vs. Orient Telecoms |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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