Correlation Between Ross Stores and Kodiak Gas
Can any of the company-specific risk be diversified away by investing in both Ross Stores and Kodiak Gas 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 Kodiak Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Kodiak Gas Services,, you can compare the effects of market volatilities on Ross Stores and Kodiak Gas 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 Kodiak Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Kodiak Gas.
Diversification Opportunities for Ross Stores and Kodiak Gas
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ross and Kodiak is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Kodiak Gas Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Gas Services, 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 Kodiak Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Gas Services, has no effect on the direction of Ross Stores i.e., Ross Stores and Kodiak Gas go up and down completely randomly.
Pair Corralation between Ross Stores and Kodiak Gas
Given the investment horizon of 90 days Ross Stores is expected to under-perform the Kodiak Gas. But the stock apears to be less risky and, when comparing its historical volatility, Ross Stores is 1.98 times less risky than Kodiak Gas. The stock trades about 0.0 of its potential returns per unit of risk. The Kodiak Gas Services, is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,581 in Kodiak Gas Services, on November 28, 2024 and sell it today you would earn a total of 1,622 from holding Kodiak Gas Services, or generate 62.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. Kodiak Gas Services,
Performance |
| Timeline |
| Ross Stores |
| Kodiak Gas Services, |
Ross Stores and Kodiak Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Kodiak Gas
The main advantage of trading using opposite Ross Stores and Kodiak Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Kodiak Gas 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 Kodiak Gas will offset losses from the drop in Kodiak Gas' long position.| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
| Kodiak Gas vs. Ambev SA ADR | Kodiak Gas vs. Molson Coors Brewing | Kodiak Gas vs. Cheche Group Class | Kodiak Gas vs. Siriuspoint |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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