Correlation Between Ross Stores and Retail Estates
Can any of the company-specific risk be diversified away by investing in both Ross Stores and Retail Estates 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 Retail Estates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Retail Estates NV, you can compare the effects of market volatilities on Ross Stores and Retail Estates 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 Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Retail Estates.
Diversification Opportunities for Ross Stores and Retail Estates
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ross and Retail is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV 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 Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of Ross Stores i.e., Ross Stores and Retail Estates go up and down completely randomly.
Pair Corralation between Ross Stores and Retail Estates
Assuming the 90 days trading horizon Ross Stores is expected to generate 2.11 times more return on investment than Retail Estates. However, Ross Stores is 2.11 times more volatile than Retail Estates NV. It trades about 0.11 of its potential returns per unit of risk. Retail Estates NV is currently generating about -0.27 per unit of risk. If you would invest 13,460 in Ross Stores on August 29, 2024 and sell it today you would earn a total of 1,284 from holding Ross Stores or generate 9.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Ross Stores vs. Retail Estates NV
Performance |
| Timeline |
| Ross Stores |
| Retail Estates NV |
Ross Stores and Retail Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Retail Estates
The main advantage of trading using opposite Ross Stores and Retail Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Retail Estates 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 Retail Estates will offset losses from the drop in Retail Estates' long position.| Ross Stores vs. Apple Inc | Ross Stores vs. Apple Inc | Ross Stores vs. Superior Plus Corp | Ross Stores vs. SIVERS SEMICONDUCTORS AB |
| Retail Estates vs. DEVRY EDUCATION GRP | Retail Estates vs. MAGIC SOFTWARE ENTR | Retail Estates vs. EMBARK EDUCATION LTD | Retail Estates vs. GALENA MINING LTD |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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