Correlation Between South32 and Ross Stores
Can any of the company-specific risk be diversified away by investing in both South32 and Ross Stores 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 South32 and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South32 and Ross Stores, you can compare the effects of market volatilities on South32 and Ross Stores 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 South32 with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of South32 and Ross Stores.
Diversification Opportunities for South32 and Ross Stores
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between South32 and Ross is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding South32 and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and South32 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 South32 are associated (or correlated) with Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of South32 i.e., South32 and Ross Stores go up and down completely randomly.
Pair Corralation between South32 and Ross Stores
Assuming the 90 days trading horizon South32 is expected to under-perform the Ross Stores. In addition to that, South32 is 1.29 times more volatile than Ross Stores. It trades about -0.01 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.27 per unit of volatility. If you would invest 13,951 in Ross Stores on September 5, 2024 and sell it today you would earn a total of 1,483 from holding Ross Stores or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
South32 vs. Ross Stores
Performance |
| Timeline |
| South32 |
| Ross Stores |
South32 and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South32 and Ross Stores
The main advantage of trading using opposite South32 and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South32 position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| South32 vs. Ross Stores | South32 vs. Regions Financial Corp | South32 vs. Ameriprise Financial | South32 vs. Orient Telecoms |
| Ross Stores vs. Samsung Electronics Co | Ross Stores vs. Samsung Electronics Co | Ross Stores vs. Hyundai Motor | Ross Stores vs. Toyota Motor Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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