Correlation Between Ross Stores and T.J. Maxx
Can any of the company-specific risk be diversified away by investing in both Ross Stores and T.J. Maxx 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 T.J. Maxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and The TJX Companies, you can compare the effects of market volatilities on Ross Stores and T.J. Maxx 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 T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and T.J. Maxx.
Diversification Opportunities for Ross Stores and T.J. Maxx
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ross and T.J. is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies 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 T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Ross Stores i.e., Ross Stores and T.J. Maxx go up and down completely randomly.
Pair Corralation between Ross Stores and T.J. Maxx
Given the investment horizon of 90 days Ross Stores is expected to generate 1.81 times more return on investment than T.J. Maxx. However, Ross Stores is 1.81 times more volatile than The TJX Companies. It trades about 0.31 of its potential returns per unit of risk. The TJX Companies is currently generating about 0.53 per unit of risk. If you would invest 13,901 in Ross Stores on August 30, 2024 and sell it today you would earn a total of 1,588 from holding Ross Stores or generate 11.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. The TJX Companies
Performance |
| Timeline |
| Ross Stores |
| TJX Companies |
Ross Stores and T.J. Maxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and T.J. Maxx
The main advantage of trading using opposite Ross Stores and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
| T.J. Maxx vs. Burlington Stores | T.J. Maxx vs. Guess Inc | T.J. Maxx vs. Urban Outfitters | T.J. Maxx vs. Childrens Place |
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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