Correlation Between Ross Stores and US Bancorp
Can any of the company-specific risk be diversified away by investing in both Ross Stores and US Bancorp 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 US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and US Bancorp, you can compare the effects of market volatilities on Ross Stores and US Bancorp 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 US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and US Bancorp.
Diversification Opportunities for Ross Stores and US Bancorp
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ross and USB is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp 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 US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of Ross Stores i.e., Ross Stores and US Bancorp go up and down completely randomly.
Pair Corralation between Ross Stores and US Bancorp
Assuming the 90 days trading horizon Ross Stores is expected to generate 1.95 times more return on investment than US Bancorp. However, Ross Stores is 1.95 times more volatile than US Bancorp. It trades about 0.37 of its potential returns per unit of risk. US Bancorp is currently generating about 0.11 per unit of risk. If you would invest 286,000 in Ross Stores on September 1, 2024 and sell it today you would earn a total of 22,500 from holding Ross Stores or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 38.1% |
| Values | Daily Returns |
Ross Stores vs. US Bancorp
Performance |
| Timeline |
| Ross Stores |
| US Bancorp |
Ross Stores and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and US Bancorp
The main advantage of trading using opposite Ross Stores and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp's long position.| Ross Stores vs. The Bank of | Ross Stores vs. Deutsche Bank Aktiengesellschaft | Ross Stores vs. Southwest Airlines | Ross Stores vs. United Airlines Holdings |
| US Bancorp vs. Verizon Communications | US Bancorp vs. FIBRA Storage | US Bancorp vs. Delta Air Lines | US Bancorp vs. Southwest Airlines |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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