Correlation Between Ross Stores and Starbucks
Can any of the company-specific risk be diversified away by investing in both Ross Stores and Starbucks 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 Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Starbucks, you can compare the effects of market volatilities on Ross Stores and Starbucks 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 Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Starbucks.
Diversification Opportunities for Ross Stores and Starbucks
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ross and Starbucks is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks 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 Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Ross Stores i.e., Ross Stores and Starbucks go up and down completely randomly.
Pair Corralation between Ross Stores and Starbucks
Assuming the 90 days trading horizon Ross Stores is expected to generate 0.9 times more return on investment than Starbucks. However, Ross Stores is 1.11 times less risky than Starbucks. It trades about 0.23 of its potential returns per unit of risk. Starbucks is currently generating about 0.14 per unit of risk. If you would invest 248,866 in Ross Stores on August 29, 2024 and sell it today you would earn a total of 63,619 from holding Ross Stores or generate 25.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.75% |
| Values | Daily Returns |
Ross Stores vs. Starbucks
Performance |
| Timeline |
| Ross Stores |
| Starbucks |
Ross Stores and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Starbucks
The main advantage of trading using opposite Ross Stores and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Starbucks 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 Starbucks will offset losses from the drop in Starbucks' long position.| Ross Stores vs. FIBRA Storage | Ross Stores vs. New Oriental Education | Ross Stores vs. Monster Beverage Corp | Ross Stores vs. Southwest Airlines |
| Starbucks vs. DXC Technology | Starbucks vs. Grupo Sports World | Starbucks vs. Ross Stores | Starbucks vs. United States Steel |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |