Correlation Between Global Ship and Ross Stores

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

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

Diversification Opportunities for Global Ship and Ross Stores

-0.62

Correlation Coefficient

Global Ship  Ross Stores

Excellent diversification

The 3 months correlation between Global and Ross is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Global Ship 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 Global Ship Lease 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 Global Ship i.e., Global Ship and Ross Stores go up and down completely randomly.

Pair Corralation between Global Ship and Ross Stores

Assuming the 90 days horizon Global Ship Lease is expected to generate 1.51 times more return on investment than Ross Stores. However, Global Ship is 1.51 times more volatile than Ross Stores. It trades about 0.19 of its potential returns per unit of risk. Ross Stores is currently generating about 0.1 per unit of risk. If you would invest  2,076  in Global Ship Lease on October 8, 2024 and sell it today you would earn a total of  126.00  from holding Global Ship Lease or generate 6.07% return on investment over 90 days.

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

Global Ship Lease  vs.  Ross Stores

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ross Stores

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ross Stores unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Ship and Ross Stores

The main advantage of trading using opposite Global Ship and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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 Global Ship Lease 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.