Correlation Between Ross Stores and SSP Group
Can any of the company-specific risk be diversified away by investing in both Ross Stores and SSP Group 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 SSP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and SSP Group PLC, you can compare the effects of market volatilities on Ross Stores and SSP Group 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 SSP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and SSP Group.
Diversification Opportunities for Ross Stores and SSP Group
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ross and SSP is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and SSP Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSP Group PLC 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 SSP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSP Group PLC has no effect on the direction of Ross Stores i.e., Ross Stores and SSP Group go up and down completely randomly.
Pair Corralation between Ross Stores and SSP Group
Assuming the 90 days trading horizon Ross Stores is expected to under-perform the SSP Group. But the stock apears to be less risky and, when comparing its historical volatility, Ross Stores is 2.05 times less risky than SSP Group. The stock trades about -0.11 of its potential returns per unit of risk. The SSP Group PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 186.00 in SSP Group PLC on October 29, 2024 and sell it today you would earn a total of 13.00 from holding SSP Group PLC or generate 6.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.44% |
| Values | Daily Returns |
Ross Stores vs. SSP Group PLC
Performance |
| Timeline |
| Ross Stores |
| SSP Group PLC |
Ross Stores and SSP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and SSP Group
The main advantage of trading using opposite Ross Stores and SSP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, SSP Group 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 SSP Group will offset losses from the drop in SSP Group's long position.| Ross Stores vs. SINGAPORE AIRLINES | Ross Stores vs. CREO MEDICAL GRP | Ross Stores vs. Compugroup Medical SE | Ross Stores vs. Japan Medical Dynamic |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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