Correlation Between Birks and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Birks 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 Birks and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birks Group and Ross Stores, you can compare the effects of market volatilities on Birks 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 Birks with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birks and Ross Stores.
Diversification Opportunities for Birks and Ross Stores
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Birks and Ross is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Birks Group and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Birks 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 Birks 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 Birks i.e., Birks and Ross Stores go up and down completely randomly.
Pair Corralation between Birks and Ross Stores
Considering the 90-day investment horizon Birks Group is expected to under-perform the Ross Stores. In addition to that, Birks is 2.84 times more volatile than Ross Stores. It trades about -0.04 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.04 per unit of volatility. If you would invest 11,512 in Ross Stores on August 24, 2024 and sell it today you would earn a total of 2,784 from holding Ross Stores or generate 24.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Birks Group vs. Ross Stores
Performance |
| Timeline |
| Birks Group |
| Ross Stores |
Birks and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birks and Ross Stores
The main advantage of trading using opposite Birks and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birks 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.| Birks vs. Movado Group | Birks vs. MYT Netherlands Parent | Birks vs. Lanvin Group Holdings | Birks vs. Fossil Group |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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