Correlation Between Superior Plus and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Ross Stores, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Ross Stores.
Diversification Opportunities for Superior Plus and Ross Stores
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Superior and Ross is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Superior Plus 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 Superior Plus Corp 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 Superior Plus i.e., Superior Plus and Ross Stores go up and down completely randomly.
Pair Corralation between Superior Plus and Ross Stores
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Ross Stores. In addition to that, Superior Plus is 1.43 times more volatile than Ross Stores. It trades about -0.01 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.05 per unit of volatility. If you would invest 10,547 in Ross Stores on September 12, 2024 and sell it today you would earn a total of 4,268 from holding Ross Stores or generate 40.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Ross Stores
Performance |
| Timeline |
| Superior Plus Corp |
| Ross Stores |
Superior Plus and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Ross Stores
The main advantage of trading using opposite Superior Plus and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. AIR PRODCHEMICALS | Superior Plus vs. Suntory Beverage Food | Superior Plus vs. Molson Coors Beverage | Superior Plus vs. Monster Beverage Corp |
| Ross Stores vs. FAST RETAIL ADR | Ross Stores vs. CCC SA | Ross Stores vs. AOYAMA TRADING | Ross Stores vs. Superior Plus Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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