Correlation Between Hoteles City and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Hoteles City 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 Hoteles City and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hoteles City Express and Ross Stores, you can compare the effects of market volatilities on Hoteles City 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 Hoteles City with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hoteles City and Ross Stores.
Diversification Opportunities for Hoteles City and Ross Stores
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hoteles and Ross is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hoteles City Express and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Hoteles City 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 Hoteles City Express 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 Hoteles City i.e., Hoteles City and Ross Stores go up and down completely randomly.
Pair Corralation between Hoteles City and Ross Stores
Assuming the 90 days trading horizon Hoteles City Express is expected to under-perform the Ross Stores. But the stock apears to be less risky and, when comparing its historical volatility, Hoteles City Express is 1.01 times less risky than Ross Stores. The stock trades about -0.13 of its potential returns per unit of risk. The Ross Stores is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 289,000 in Ross Stores on August 27, 2024 and sell it today you would earn a total of 9,130 from holding Ross Stores or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 40.0% |
| Values | Daily Returns |
Hoteles City Express vs. Ross Stores
Performance |
| Timeline |
| Hoteles City Express |
| Ross Stores |
Hoteles City and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hoteles City and Ross Stores
The main advantage of trading using opposite Hoteles City and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hoteles City 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.| Hoteles City vs. Taiwan Semiconductor Manufacturing | Hoteles City vs. Alibaba Group Holding | Hoteles City vs. The Select Sector | Hoteles City vs. Promotora y Operadora |
| Ross Stores vs. Glencore plc | Ross Stores vs. iShares Trust | Ross Stores vs. US Bancorp | Ross Stores vs. American Express |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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