Correlation Between Ross Stores and United States
Can any of the company-specific risk be diversified away by investing in both Ross Stores and United States 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 United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and United States Steel, you can compare the effects of market volatilities on Ross Stores and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and United States.
Diversification Opportunities for Ross Stores and United States
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ross and United is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Ross Stores i.e., Ross Stores and United States go up and down completely randomly.
Pair Corralation between Ross Stores and United States
Given the investment horizon of 90 days Ross Stores is expected to under-perform the United States. But the stock apears to be less risky and, when comparing its historical volatility, Ross Stores is 2.38 times less risky than United States. The stock trades about -0.04 of its potential returns per unit of risk. The United States Steel is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,946 in United States Steel on August 24, 2024 and sell it today you would earn a total of 10.00 from holding United States Steel or generate 0.25% 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. United States Steel
Performance |
| Timeline |
| Ross Stores |
| United States Steel |
Ross Stores and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and United States
The main advantage of trading using opposite Ross Stores and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
| United States vs. Nucor Corp | United States vs. Steel Dynamics | United States vs. ArcelorMittal SA ADR | United States vs. Gerdau SA ADR |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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