Correlation Between Ross Stores and Childrens Place
Can any of the company-specific risk be diversified away by investing in both Ross Stores and Childrens Place 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 Childrens Place into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Childrens Place, you can compare the effects of market volatilities on Ross Stores and Childrens Place 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 Childrens Place. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Childrens Place.
Diversification Opportunities for Ross Stores and Childrens Place
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ross and Childrens is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Childrens Place in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Childrens Place 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 Childrens Place. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Childrens Place has no effect on the direction of Ross Stores i.e., Ross Stores and Childrens Place go up and down completely randomly.
Pair Corralation between Ross Stores and Childrens Place
Given the investment horizon of 90 days Ross Stores is expected to generate 3.74 times less return on investment than Childrens Place. But when comparing it to its historical volatility, Ross Stores is 7.15 times less risky than Childrens Place. It trades about 0.08 of its potential returns per unit of risk. Childrens Place is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,551 in Childrens Place on August 27, 2024 and sell it today you would earn a total of 59.00 from holding Childrens Place or generate 3.8% 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. Childrens Place
Performance |
| Timeline |
| Ross Stores |
| Childrens Place |
Ross Stores and Childrens Place Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Childrens Place
The main advantage of trading using opposite Ross Stores and Childrens Place positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Childrens Place 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 Childrens Place will offset losses from the drop in Childrens Place's long position.| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
| Childrens Place vs. Ross Stores | Childrens Place vs. Buckle Inc | Childrens Place vs. Guess Inc | Childrens Place vs. Abercrombie Fitch |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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