Correlation Between United States and Ross Stores
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Ross Stores, you can compare the effects of market volatilities on United States 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 United States with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Ross Stores.
Diversification Opportunities for United States and Ross Stores
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Ross is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and United States 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 United States Steel 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 United States i.e., United States and Ross Stores go up and down completely randomly.
Pair Corralation between United States and Ross Stores
Given the investment horizon of 90 days United States Steel is expected to generate 1.38 times more return on investment than Ross Stores. However, United States is 1.38 times more volatile than Ross Stores. It trades about 0.07 of its potential returns per unit of risk. Ross Stores is currently generating about 0.08 per unit of risk. If you would invest 74,011 in United States Steel on August 31, 2024 and sell it today you would earn a total of 8,399 from holding United States Steel or generate 11.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 36.07% |
| Values | Daily Returns |
United States Steel vs. Ross Stores
Performance |
| Timeline |
| United States Steel |
| Ross Stores |
United States and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Ross Stores
The main advantage of trading using opposite United States and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Delta Air Lines | United States vs. Grupo Carso SAB | United States vs. McEwen Mining | United States vs. Monster Beverage Corp |
| Ross Stores vs. KB Home | Ross Stores vs. Grupo Sports World | Ross Stores vs. The Bank of | Ross Stores vs. Hoteles City Express |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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