Correlation Between LightInTheBox Holding and Ross Stores
Can any of the company-specific risk be diversified away by investing in both LightInTheBox Holding 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 LightInTheBox Holding and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LightInTheBox Holding Co and Ross Stores, you can compare the effects of market volatilities on LightInTheBox Holding 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 LightInTheBox Holding with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of LightInTheBox Holding and Ross Stores.
Diversification Opportunities for LightInTheBox Holding and Ross Stores
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LightInTheBox and Ross is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding LightInTheBox Holding Co and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and LightInTheBox Holding 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 LightInTheBox Holding Co 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 LightInTheBox Holding i.e., LightInTheBox Holding and Ross Stores go up and down completely randomly.
Pair Corralation between LightInTheBox Holding and Ross Stores
Given the investment horizon of 90 days LightInTheBox Holding Co is expected to under-perform the Ross Stores. In addition to that, LightInTheBox Holding is 6.69 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 0.03 per unit of volatility. If you would invest 13,696 in Ross Stores on August 24, 2024 and sell it today you would earn a total of 600.00 from holding Ross Stores or generate 4.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LightInTheBox Holding Co vs. Ross Stores
Performance |
| Timeline |
| LightInTheBox Holding |
| Ross Stores |
LightInTheBox Holding and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LightInTheBox Holding and Ross Stores
The main advantage of trading using opposite LightInTheBox Holding and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LightInTheBox Holding 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.| LightInTheBox Holding vs. Qurate Retail Series | LightInTheBox Holding vs. Natural Health Trend | LightInTheBox Holding vs. Liquidity Services | LightInTheBox Holding vs. Qurate Retail |
| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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