Correlation Between OReilly Automotive and Ross Stores
Can any of the company-specific risk be diversified away by investing in both OReilly Automotive 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 OReilly Automotive and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OReilly Automotive and Ross Stores, you can compare the effects of market volatilities on OReilly Automotive 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 OReilly Automotive with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of OReilly Automotive and Ross Stores.
Diversification Opportunities for OReilly Automotive and Ross Stores
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OReilly and Ross is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding OReilly Automotive and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and OReilly Automotive 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 OReilly Automotive 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 OReilly Automotive i.e., OReilly Automotive and Ross Stores go up and down completely randomly.
Pair Corralation between OReilly Automotive and Ross Stores
Given the investment horizon of 90 days OReilly Automotive is expected to generate 3.98 times less return on investment than Ross Stores. But when comparing it to its historical volatility, OReilly Automotive is 1.39 times less risky than Ross Stores. It trades about 0.02 of its potential returns per unit of risk. Ross Stores is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 14,779 in Ross Stores on October 20, 2024 and sell it today you would earn a total of 136.00 from holding Ross Stores or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OReilly Automotive vs. Ross Stores
Performance |
| Timeline |
| OReilly Automotive |
| Ross Stores |
OReilly Automotive and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OReilly Automotive and Ross Stores
The main advantage of trading using opposite OReilly Automotive and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OReilly Automotive 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.| OReilly Automotive vs. Dicks Sporting Goods | OReilly Automotive vs. Ulta Beauty | OReilly Automotive vs. Williams Sonoma | OReilly Automotive vs. RH |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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