Correlation Between Ross Stores and Eversource Energy
Can any of the company-specific risk be diversified away by investing in both Ross Stores and Eversource Energy 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 Eversource Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Eversource Energy, you can compare the effects of market volatilities on Ross Stores and Eversource Energy 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 Eversource Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Eversource Energy.
Diversification Opportunities for Ross Stores and Eversource Energy
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ross and Eversource is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Eversource Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eversource Energy 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 Eversource Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eversource Energy has no effect on the direction of Ross Stores i.e., Ross Stores and Eversource Energy go up and down completely randomly.
Pair Corralation between Ross Stores and Eversource Energy
Assuming the 90 days trading horizon Ross Stores is expected to generate 1.07 times more return on investment than Eversource Energy. However, Ross Stores is 1.07 times more volatile than Eversource Energy. It trades about 0.07 of its potential returns per unit of risk. Eversource Energy is currently generating about 0.06 per unit of risk. If you would invest 12,872 in Ross Stores on September 3, 2024 and sell it today you would earn a total of 1,966 from holding Ross Stores or generate 15.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. Eversource Energy
Performance |
| Timeline |
| Ross Stores |
| Eversource Energy |
Ross Stores and Eversource Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Eversource Energy
The main advantage of trading using opposite Ross Stores and Eversource Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Eversource Energy 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 Eversource Energy will offset losses from the drop in Eversource Energy's long position.| Ross Stores vs. TOTAL GABON | Ross Stores vs. Walgreens Boots Alliance | Ross Stores vs. Peak Resources Limited |
| Eversource Energy vs. Compagnie Plastic Omnium | Eversource Energy vs. Materialise NV | Eversource Energy vs. Goodyear Tire Rubber | Eversource Energy vs. LION ONE METALS |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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