Correlation Between Ross Stores and Guess
Can any of the company-specific risk be diversified away by investing in both Ross Stores and Guess 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 Guess into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Guess Inc, you can compare the effects of market volatilities on Ross Stores and Guess 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 Guess. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Guess.
Diversification Opportunities for Ross Stores and Guess
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ross and Guess is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Guess Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guess Inc 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 Guess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guess Inc has no effect on the direction of Ross Stores i.e., Ross Stores and Guess go up and down completely randomly.
Pair Corralation between Ross Stores and Guess
Given the investment horizon of 90 days Ross Stores is expected to under-perform the Guess. But the stock apears to be less risky and, when comparing its historical volatility, Ross Stores is 1.82 times less risky than Guess. The stock trades about -0.28 of its potential returns per unit of risk. The Guess Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,259 in Guess Inc on November 18, 2024 and sell it today you would lose (18.00) from holding Guess Inc or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. Guess Inc
Performance |
| Timeline |
| Ross Stores |
| Guess Inc |
Ross Stores and Guess Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Guess
The main advantage of trading using opposite Ross Stores and Guess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Guess 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 Guess will offset losses from the drop in Guess' long position.| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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