Correlation Between IShares Trust and Ross Stores
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Ross Stores, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Ross Stores.
Diversification Opportunities for IShares Trust and Ross Stores
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Ross is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and Ross Stores go up and down completely randomly.
Pair Corralation between IShares Trust and Ross Stores
Assuming the 90 days trading horizon IShares Trust is expected to generate 2.05 times less return on investment than Ross Stores. But when comparing it to its historical volatility, iShares Trust is 1.77 times less risky than Ross Stores. It trades about 0.13 of its potential returns per unit of risk. Ross Stores is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 231,408 in Ross Stores on August 25, 2024 and sell it today you would earn a total of 66,722 from holding Ross Stores or generate 28.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 30.26% |
| Values | Daily Returns |
iShares Trust vs. Ross Stores
Performance |
| Timeline |
| iShares Trust |
| Ross Stores |
IShares Trust and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Ross Stores
The main advantage of trading using opposite IShares Trust and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.| IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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