Correlation Between Retail Estates and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and Ross Stores, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Ross Stores.
Diversification Opportunities for Retail Estates and Ross Stores
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Retail and Ross is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and Ross Stores go up and down completely randomly.
Pair Corralation between Retail Estates and Ross Stores
Assuming the 90 days horizon Retail Estates NV is expected to under-perform the Ross Stores. But the stock apears to be less risky and, when comparing its historical volatility, Retail Estates NV is 2.55 times less risky than Ross Stores. The stock trades about -0.22 of its potential returns per unit of risk. The Ross Stores is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 12,888 in Ross Stores on September 1, 2024 and sell it today you would earn a total of 1,748 from holding Ross Stores or generate 13.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates NV vs. Ross Stores
Performance |
| Timeline |
| Retail Estates NV |
| Ross Stores |
Retail Estates and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and Ross Stores
The main advantage of trading using opposite Retail Estates and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.| Retail Estates vs. Superior Plus Corp | Retail Estates vs. NMI Holdings | Retail Estates vs. Origin Agritech | Retail Estates vs. SIVERS SEMICONDUCTORS AB |
| Ross Stores vs. CHINA EDUCATION GROUP | Ross Stores vs. CapitaLand Investment Limited | Ross Stores vs. Chuangs China Investments | Ross Stores vs. Laureate Education |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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