Correlation Between Ross Stores and State Bank
Can any of the company-specific risk be diversified away by investing in both Ross Stores and State Bank 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 State Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and State Bank of, you can compare the effects of market volatilities on Ross Stores and State Bank 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 State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and State Bank.
Diversification Opportunities for Ross Stores and State Bank
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ross and State is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank 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 State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of Ross Stores i.e., Ross Stores and State Bank go up and down completely randomly.
Pair Corralation between Ross Stores and State Bank
Assuming the 90 days trading horizon Ross Stores is expected to generate 0.76 times more return on investment than State Bank. However, Ross Stores is 1.32 times less risky than State Bank. It trades about -0.04 of its potential returns per unit of risk. State Bank of is currently generating about -0.12 per unit of risk. If you would invest 15,465 in Ross Stores on November 4, 2024 and sell it today you would lose (187.00) from holding Ross Stores or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. State Bank of
Performance |
| Timeline |
| Ross Stores |
| State Bank |
Ross Stores and State Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and State Bank
The main advantage of trading using opposite Ross Stores and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, State Bank 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 State Bank will offset losses from the drop in State Bank's long position.| Ross Stores vs. Travel Leisure Co | Ross Stores vs. United States Steel | Ross Stores vs. Playtech Plc | Ross Stores vs. Dentsply Sirona |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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