Correlation Between Lerøy Seafood and Ross Stores

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Can any of the company-specific risk be diversified away by investing in both Lerøy Seafood 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 Lerøy Seafood and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lery Seafood Group and Ross Stores, you can compare the effects of market volatilities on Lerøy Seafood 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 Lerøy Seafood with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lerøy Seafood and Ross Stores.

Diversification Opportunities for Lerøy Seafood and Ross Stores

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Lerøy and Ross is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lery Seafood Group and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Lerøy Seafood 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 Lery Seafood Group 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 Lerøy Seafood i.e., Lerøy Seafood and Ross Stores go up and down completely randomly.

Pair Corralation between Lerøy Seafood and Ross Stores

Assuming the 90 days horizon Lery Seafood Group is expected to generate 1.13 times more return on investment than Ross Stores. However, Lerøy Seafood is 1.13 times more volatile than Ross Stores. It trades about 0.43 of its potential returns per unit of risk. Ross Stores is currently generating about -0.07 per unit of risk. If you would invest  417.00  in Lery Seafood Group on November 4, 2024 and sell it today you would earn a total of  60.00  from holding Lery Seafood Group or generate 14.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Lery Seafood Group  vs.  Ross Stores

 Performance 
       Timeline  
Lery Seafood Group 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Lery Seafood Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lerøy Seafood reported solid returns over the last few months and may actually be approaching a breakup point.
Ross Stores 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
OK
Over the last 90 days Ross Stores has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ross Stores is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lerøy Seafood and Ross Stores Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lerøy Seafood and Ross Stores

The main advantage of trading using opposite Lerøy Seafood and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lerøy Seafood 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.
The idea behind Lery Seafood Group and Ross Stores pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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