Correlation Between Ross Stores and HF FOODS
Can any of the company-specific risk be diversified away by investing in both Ross Stores and HF FOODS 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 HF FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and HF FOODS GRP, you can compare the effects of market volatilities on Ross Stores and HF FOODS 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 HF FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and HF FOODS.
Diversification Opportunities for Ross Stores and HF FOODS
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ross and 3GX is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and HF FOODS GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF FOODS GRP 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 HF FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF FOODS GRP has no effect on the direction of Ross Stores i.e., Ross Stores and HF FOODS go up and down completely randomly.
Pair Corralation between Ross Stores and HF FOODS
Assuming the 90 days trading horizon Ross Stores is expected to generate 0.37 times more return on investment than HF FOODS. However, Ross Stores is 2.71 times less risky than HF FOODS. It trades about 0.05 of its potential returns per unit of risk. HF FOODS GRP is currently generating about 0.01 per unit of risk. If you would invest 10,698 in Ross Stores on October 9, 2024 and sell it today you would earn a total of 4,254 from holding Ross Stores or generate 39.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. HF FOODS GRP
Performance |
| Timeline |
| Ross Stores |
| HF FOODS GRP |
Ross Stores and HF FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and HF FOODS
The main advantage of trading using opposite Ross Stores and HF FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, HF FOODS 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 HF FOODS will offset losses from the drop in HF FOODS's long position.| Ross Stores vs. Zoom Video Communications | Ross Stores vs. SILICON LABORATOR | Ross Stores vs. Sinopec Shanghai Petrochemical | Ross Stores vs. China Communications Services |
| HF FOODS vs. Algonquin Power Utilities | HF FOODS vs. UNIVERSAL MUSIC GROUP | HF FOODS vs. Air New Zealand | HF FOODS vs. RYANAIR HLDGS 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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