Correlation Between ITALIAN WINE and Ross Stores
Can any of the company-specific risk be diversified away by investing in both ITALIAN WINE 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 ITALIAN WINE and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITALIAN WINE BRANDS and Ross Stores, you can compare the effects of market volatilities on ITALIAN WINE 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 ITALIAN WINE with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and Ross Stores.
Diversification Opportunities for ITALIAN WINE and Ross Stores
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between ITALIAN and Ross is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and ITALIAN WINE 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 ITALIAN WINE BRANDS 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 ITALIAN WINE i.e., ITALIAN WINE and Ross Stores go up and down completely randomly.
Pair Corralation between ITALIAN WINE and Ross Stores
Assuming the 90 days horizon ITALIAN WINE is expected to generate 1.76 times less return on investment than Ross Stores. In addition to that, ITALIAN WINE is 1.2 times more volatile than Ross Stores. It trades about 0.04 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.08 per unit of volatility. If you would invest 12,671 in Ross Stores on August 29, 2024 and sell it today you would earn a total of 2,073 from holding Ross Stores or generate 16.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITALIAN WINE BRANDS vs. Ross Stores
Performance |
| Timeline |
| ITALIAN WINE BRANDS |
| Ross Stores |
ITALIAN WINE and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITALIAN WINE and Ross Stores
The main advantage of trading using opposite ITALIAN WINE and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE 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.| ITALIAN WINE vs. Merit Medical Systems | ITALIAN WINE vs. GOODYEAR T RUBBER | ITALIAN WINE vs. SCANDMEDICAL SOLDK 040 | ITALIAN WINE vs. Apollo Medical Holdings |
| Ross Stores vs. Apple Inc | Ross Stores vs. Apple Inc | Ross Stores vs. Microsoft | Ross Stores vs. Microsoft |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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