Correlation Between Scandic Hotels and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Scandic Hotels and Ross Stores 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 Scandic Hotels and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandic Hotels Group and Ross Stores, you can compare the effects of market volatilities on Scandic Hotels and Ross Stores 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 Scandic Hotels with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandic Hotels and Ross Stores.
Diversification Opportunities for Scandic Hotels and Ross Stores
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandic and Ross is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Scandic Hotels 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 Scandic Hotels Group are associated (or correlated) with Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Scandic Hotels i.e., Scandic Hotels and Ross Stores go up and down completely randomly.
Pair Corralation between Scandic Hotels and Ross Stores
Assuming the 90 days trading horizon Scandic Hotels Group is expected to generate 1.45 times more return on investment than Ross Stores. However, Scandic Hotels is 1.45 times more volatile than Ross Stores. It trades about 0.09 of its potential returns per unit of risk. Ross Stores is currently generating about 0.05 per unit of risk. If you would invest 3,116 in Scandic Hotels Group on September 20, 2024 and sell it today you would earn a total of 3,592 from holding Scandic Hotels Group or generate 115.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 97.8% |
Values | Daily Returns |
Scandic Hotels Group vs. Ross Stores
Performance |
Timeline |
Scandic Hotels Group |
Ross Stores |
Scandic Hotels and Ross Stores Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Scandic Hotels and Ross Stores
The main advantage of trading using opposite Scandic Hotels and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandic Hotels position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.Scandic Hotels vs. Samsung Electronics Co | Scandic Hotels vs. Samsung Electronics Co | Scandic Hotels vs. Hyundai Motor | Scandic Hotels vs. Reliance Industries Ltd |
Ross Stores vs. Samsung Electronics Co | Ross Stores vs. Samsung Electronics Co | Ross Stores vs. Hyundai Motor | Ross Stores vs. Reliance Industries Ltd |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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