Correlation Between SIDETRADE and Ross Stores

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

By analyzing existing cross correlation between SIDETRADE EO 1 and Ross Stores, you can compare the effects of market volatilities on SIDETRADE 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 SIDETRADE with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIDETRADE and Ross Stores.

Diversification Opportunities for SIDETRADE and Ross Stores

-0.13

Correlation Coefficient

SIDETRADE  Ross Stores

Good diversification

The 3 months correlation between SIDETRADE and Ross is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding SIDETRADE EO 1 and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and SIDETRADE 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 SIDETRADE EO 1 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 SIDETRADE i.e., SIDETRADE and Ross Stores go up and down completely randomly.

Pair Corralation between SIDETRADE and Ross Stores

Assuming the 90 days horizon SIDETRADE EO 1 is expected to under-perform the Ross Stores. But the stock apears to be less risky and, when comparing its historical volatility, SIDETRADE EO 1 is 1.31 times less risky than Ross Stores. The stock trades about -0.2 of its potential returns per unit of risk. The Ross Stores is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  13,935  in Ross Stores on September 24, 2024 and sell it today you would earn a total of  407.00  from holding Ross Stores or generate 2.92% return on investment over 90 days.

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

SIDETRADE EO 1  vs.  Ross Stores

SIDETRADE EO 1

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days SIDETRADE EO 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SIDETRADE 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

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ross Stores may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SIDETRADE and Ross Stores

The main advantage of trading using opposite SIDETRADE and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIDETRADE 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 SIDETRADE EO 1 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.