Correlation Between Litigation Capital and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Litigation Capital 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 Litigation Capital and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litigation Capital Management and Ross Stores, you can compare the effects of market volatilities on Litigation Capital 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 Litigation Capital with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and Ross Stores.
Diversification Opportunities for Litigation Capital and Ross Stores
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Litigation and Ross is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Litigation Capital 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 Litigation Capital Management 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 Litigation Capital i.e., Litigation Capital and Ross Stores go up and down completely randomly.
Pair Corralation between Litigation Capital and Ross Stores
Assuming the 90 days trading horizon Litigation Capital Management is expected to generate 1.84 times more return on investment than Ross Stores. However, Litigation Capital is 1.84 times more volatile than Ross Stores. It trades about 0.13 of its potential returns per unit of risk. Ross Stores is currently generating about -0.04 per unit of risk. If you would invest 10,073 in Litigation Capital Management on August 25, 2024 and sell it today you would earn a total of 1,502 from holding Litigation Capital Management or generate 14.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Litigation Capital Management vs. Ross Stores
Performance |
| Timeline |
| Litigation Capital |
| Ross Stores |
Litigation Capital and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litigation Capital and Ross Stores
The main advantage of trading using opposite Litigation Capital and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litigation Capital 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.| Litigation Capital vs. Catalyst Media Group | Litigation Capital vs. Oncimmune Holdings plc | Litigation Capital vs. Invesco Health Care | Litigation Capital vs. Coor Service Management |
| Ross Stores vs. Samsung Electronics Co | Ross Stores vs. Samsung Electronics Co | Ross Stores vs. Hyundai Motor | Ross Stores vs. Toyota Motor Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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