Correlation Between Ross Stores and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Ross Stores and Raytheon Technologies 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 Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Raytheon Technologies, you can compare the effects of market volatilities on Ross Stores and Raytheon Technologies 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 Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Raytheon Technologies.
Diversification Opportunities for Ross Stores and Raytheon Technologies
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ross and Raytheon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Raytheon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies 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 Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of Ross Stores i.e., Ross Stores and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Ross Stores and Raytheon Technologies
Assuming the 90 days trading horizon Ross Stores is expected to generate 1.0 times more return on investment than Raytheon Technologies. However, Ross Stores is 1.0 times less risky than Raytheon Technologies. It trades about 0.48 of its potential returns per unit of risk. Raytheon Technologies is currently generating about -0.06 per unit of risk. If you would invest 40,158 in Ross Stores on September 12, 2024 and sell it today you would earn a total of 6,710 from holding Ross Stores or generate 16.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Ross Stores vs. Raytheon Technologies
Performance |
| Timeline |
| Ross Stores |
| Raytheon Technologies |
Ross Stores and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Raytheon Technologies
The main advantage of trading using opposite Ross Stores and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Raytheon Technologies 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 Raytheon Technologies will offset losses from the drop in Raytheon Technologies' 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 |
| Raytheon Technologies vs. Take Two Interactive Software | Raytheon Technologies vs. Delta Air Lines | Raytheon Technologies vs. GX AI TECH | Raytheon Technologies vs. Uber Technologies |
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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