Correlation Between Auto Trader and Ross Stores

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Auto Trader 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 Auto Trader and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and Ross Stores, you can compare the effects of market volatilities on Auto Trader 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 Auto Trader with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Ross Stores.

Diversification Opportunities for Auto Trader and Ross Stores

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between Auto and Ross is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Auto Trader 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 Auto Trader 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 Auto Trader i.e., Auto Trader and Ross Stores go up and down completely randomly.

Pair Corralation between Auto Trader and Ross Stores

Assuming the 90 days trading horizon Auto Trader is expected to generate 1.18 times less return on investment than Ross Stores. In addition to that, Auto Trader is 1.11 times more volatile than Ross Stores. It trades about 0.06 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.08 per unit of volatility. If you would invest  9,507  in Ross Stores on September 6, 2024 and sell it today you would earn a total of  5,259  from holding Ross Stores or generate 55.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.75%
ValuesDaily Returns

Auto Trader Group  vs.  Ross Stores

 Performance 
       Timeline  
Auto Trader Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Auto Trader Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Auto Trader is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
Ross Stores 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Ross Stores may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Auto Trader and Ross Stores Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Auto Trader and Ross Stores

The main advantage of trading using opposite Auto Trader and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader 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 Auto Trader 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.
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

Other Complementary Tools

Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Stocks Directory
Find actively traded stocks across global markets
CEOs Directory
Screen CEOs from public companies around the world