Correlation Between MOVIE GAMES and Ross Stores

Can any of the company-specific risk be diversified away by investing in both MOVIE GAMES 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 MOVIE GAMES and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MOVIE GAMES SA and Ross Stores, you can compare the effects of market volatilities on MOVIE GAMES 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 MOVIE GAMES with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOVIE GAMES and Ross Stores.

Diversification Opportunities for MOVIE GAMES and Ross Stores

-0.69

Correlation Coefficient

MOVIE GAMES  Ross Stores

Excellent diversification

The 3 months correlation between MOVIE and Ross is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding MOVIE GAMES SA and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and MOVIE GAMES 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 MOVIE GAMES SA 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 MOVIE GAMES i.e., MOVIE GAMES and Ross Stores go up and down completely randomly.

Pair Corralation between MOVIE GAMES and Ross Stores

Assuming the 90 days horizon MOVIE GAMES is expected to generate 7.79 times less return on investment than Ross Stores. In addition to that, MOVIE GAMES is 2.71 times more volatile than Ross Stores. It trades about 0.0 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.06 per unit of volatility. If you would invest  10,367  in Ross Stores on October 11, 2024 and sell it today you would earn a total of  4,575  from holding Ross Stores or generate 44.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

MOVIE GAMES SA  vs.  Ross Stores

MOVIE GAMES SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ross Stores

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Ross Stores unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MOVIE GAMES and Ross Stores

The main advantage of trading using opposite MOVIE GAMES and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOVIE GAMES 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 MOVIE GAMES SA 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.