Correlation Between Aritzia and Ross Stores

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

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

Diversification Opportunities for Aritzia and Ross Stores

0.43

Correlation Coefficient

Aritzia  Ross Stores

Very weak diversification

The 3 months correlation between Aritzia and Ross is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Aritzia and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Aritzia 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 Aritzia 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 Aritzia i.e., Aritzia and Ross Stores go up and down completely randomly.

Pair Corralation between Aritzia and Ross Stores

Assuming the 90 days horizon Aritzia is expected to generate 2.22 times more return on investment than Ross Stores. However, Aritzia is 2.22 times more volatile than Ross Stores. It trades about 0.34 of its potential returns per unit of risk. Ross Stores is currently generating about -0.12 per unit of risk. If you would invest  3,282  in Aritzia on September 24, 2024 and sell it today you would earn a total of  483.00  from holding Aritzia or generate 14.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Aritzia  vs.  Ross Stores

Aritzia

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aritzia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aritzia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ross Stores

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ross Stores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ross Stores is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aritzia and Ross Stores

The main advantage of trading using opposite Aritzia and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aritzia 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 Aritzia 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.