Correlation Between Abercrombie Fitch and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Abercrombie Fitch 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 Abercrombie Fitch and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abercrombie Fitch and Ross Stores, you can compare the effects of market volatilities on Abercrombie Fitch 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 Abercrombie Fitch with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abercrombie Fitch and Ross Stores.
Diversification Opportunities for Abercrombie Fitch and Ross Stores
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Abercrombie and Ross is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Abercrombie Fitch and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Abercrombie Fitch 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 Abercrombie Fitch 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 Abercrombie Fitch i.e., Abercrombie Fitch and Ross Stores go up and down completely randomly.
Pair Corralation between Abercrombie Fitch and Ross Stores
Considering the 90-day investment horizon Abercrombie Fitch is expected to generate 2.68 times more return on investment than Ross Stores. However, Abercrombie Fitch is 2.68 times more volatile than Ross Stores. It trades about 0.13 of its potential returns per unit of risk. Ross Stores is currently generating about 0.04 per unit of risk. If you would invest 2,287 in Abercrombie Fitch on August 26, 2024 and sell it today you would earn a total of 12,912 from holding Abercrombie Fitch or generate 564.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abercrombie Fitch vs. Ross Stores
Performance |
| Timeline |
| Abercrombie Fitch |
| Ross Stores |
Abercrombie Fitch and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abercrombie Fitch and Ross Stores
The main advantage of trading using opposite Abercrombie Fitch and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abercrombie Fitch 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.| Abercrombie Fitch vs. Urban Outfitters | Abercrombie Fitch vs. Foot Locker | Abercrombie Fitch vs. Childrens Place | Abercrombie Fitch vs. American Eagle Outfitters |
| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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