Correlation Between AeroVironment and Ross Stores
Can any of the company-specific risk be diversified away by investing in both AeroVironment 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 AeroVironment and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AeroVironment and Ross Stores, you can compare the effects of market volatilities on AeroVironment 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 AeroVironment with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of AeroVironment and Ross Stores.
Diversification Opportunities for AeroVironment and Ross Stores
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AeroVironment and Ross is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding AeroVironment and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and AeroVironment 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 AeroVironment 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 AeroVironment i.e., AeroVironment and Ross Stores go up and down completely randomly.
Pair Corralation between AeroVironment and Ross Stores
Assuming the 90 days horizon AeroVironment is expected to generate 2.24 times more return on investment than Ross Stores. However, AeroVironment is 2.24 times more volatile than Ross Stores. It trades about 0.03 of its potential returns per unit of risk. Ross Stores is currently generating about 0.06 per unit of risk. If you would invest 15,715 in AeroVironment on October 18, 2024 and sell it today you would earn a total of 660.00 from holding AeroVironment or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AeroVironment vs. Ross Stores
Performance |
| Timeline |
| AeroVironment |
| Ross Stores |
AeroVironment and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AeroVironment and Ross Stores
The main advantage of trading using opposite AeroVironment and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AeroVironment 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.| AeroVironment vs. bet at home AG | AeroVironment vs. PICKN PAY STORES | AeroVironment vs. MARKET VECTR RETAIL | AeroVironment vs. Retail Estates NV |
| Ross Stores vs. Kingdee International Software | Ross Stores vs. Nordic Semiconductor ASA | Ross Stores vs. Easy Software AG | Ross Stores vs. Magnachip Semiconductor |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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