Correlation Between Ross Stores and CoStar
Can any of the company-specific risk be diversified away by investing in both Ross Stores and CoStar 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 CoStar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and CoStar Group, you can compare the effects of market volatilities on Ross Stores and CoStar 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 CoStar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and CoStar.
Diversification Opportunities for Ross Stores and CoStar
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ross and CoStar is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and CoStar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoStar Group 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 CoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoStar Group has no effect on the direction of Ross Stores i.e., Ross Stores and CoStar go up and down completely randomly.
Pair Corralation between Ross Stores and CoStar
Assuming the 90 days trading horizon Ross Stores is expected to generate 0.55 times more return on investment than CoStar. However, Ross Stores is 1.82 times less risky than CoStar. It trades about 0.27 of its potential returns per unit of risk. CoStar Group is currently generating about 0.08 per unit of risk. If you would invest 40,018 in Ross Stores on September 13, 2024 and sell it today you would earn a total of 6,850 from holding Ross Stores or generate 17.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.86% |
| Values | Daily Returns |
Ross Stores vs. CoStar Group
Performance |
| Timeline |
| Ross Stores |
| CoStar Group |
Ross Stores and CoStar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and CoStar
The main advantage of trading using opposite Ross Stores and CoStar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, CoStar 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 CoStar will offset losses from the drop in CoStar's long position.| Ross Stores vs. Fundo Investimento Imobiliario | Ross Stores vs. LESTE FDO INV | Ross Stores vs. Fras le SA | Ross Stores vs. Western Digital |
| CoStar vs. Costco Wholesale | CoStar vs. UnitedHealth Group Incorporated | CoStar vs. Ross Stores | CoStar vs. NXP Semiconductors NV |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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