Correlation Between Central Asia and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Central Asia 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 Central Asia and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Asia Metals and Ross Stores, you can compare the effects of market volatilities on Central Asia 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 Central Asia with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Asia and Ross Stores.
Diversification Opportunities for Central Asia and Ross Stores
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Central and Ross is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Central Asia 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 Central Asia Metals 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 Central Asia i.e., Central Asia and Ross Stores go up and down completely randomly.
Pair Corralation between Central Asia and Ross Stores
Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the Ross Stores. In addition to that, Central Asia is 1.35 times more volatile than Ross Stores. It trades about -0.02 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 11,509 in Ross Stores on September 3, 2024 and sell it today you would earn a total of 3,991 from holding Ross Stores or generate 34.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.99% |
| Values | Daily Returns |
Central Asia Metals vs. Ross Stores
Performance |
| Timeline |
| Central Asia Metals |
| Ross Stores |
Central Asia and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Asia and Ross Stores
The main advantage of trading using opposite Central Asia and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Asia 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.The idea behind Central Asia Metals and Ross Stores pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ross Stores vs. Federal Realty Investment | Ross Stores vs. Herald Investment Trust | Ross Stores vs. Taylor Maritime Investments | Ross Stores vs. British American Tobacco |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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