Correlation Between Ross Stores and First Solar
Can any of the company-specific risk be diversified away by investing in both Ross Stores and First Solar 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 Ross Stores and First Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and First Solar, you can compare the effects of market volatilities on Ross Stores and First Solar 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 Ross Stores with a short position of First Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and First Solar.
Diversification Opportunities for Ross Stores and First Solar
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ross and First is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar and Ross Stores 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 Ross Stores are associated (or correlated) with First Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Solar has no effect on the direction of Ross Stores i.e., Ross Stores and First Solar go up and down completely randomly.
Pair Corralation between Ross Stores and First Solar
Assuming the 90 days trading horizon Ross Stores is expected to generate 0.76 times more return on investment than First Solar. However, Ross Stores is 1.31 times less risky than First Solar. It trades about 0.5 of its potential returns per unit of risk. First Solar is currently generating about 0.06 per unit of risk. If you would invest 287,967 in Ross Stores on September 12, 2024 and sell it today you would earn a total of 28,957 from holding Ross Stores or generate 10.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 40.91% |
| Values | Daily Returns |
Ross Stores vs. First Solar
Performance |
| Timeline |
| Ross Stores |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| First Solar |
Ross Stores and First Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and First Solar
The main advantage of trading using opposite Ross Stores and First Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, First Solar 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 First Solar will offset losses from the drop in First Solar's long position.| Ross Stores vs. Costco Wholesale | Ross Stores vs. Taiwan Semiconductor Manufacturing | Ross Stores vs. Monster Beverage Corp | Ross Stores vs. Genworth Financial |
| First Solar vs. Prudential Financial | First Solar vs. Verizon Communications | First Solar vs. Monster Beverage Corp | First Solar vs. McEwen Mining |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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