Correlation Between Bankers Investment and Ross Stores

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

Diversification Opportunities for Bankers Investment and Ross Stores

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Bankers and Ross is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bankers Investment Trust and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Bankers Investment 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 Bankers Investment Trust 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 Bankers Investment i.e., Bankers Investment and Ross Stores go up and down completely randomly.

Pair Corralation between Bankers Investment and Ross Stores

Assuming the 90 days trading horizon Bankers Investment Trust is expected to generate 0.41 times more return on investment than Ross Stores. However, Bankers Investment Trust is 2.44 times less risky than Ross Stores. It trades about 0.16 of its potential returns per unit of risk. Ross Stores is currently generating about 0.0 per unit of risk. If you would invest  10,928  in Bankers Investment Trust on September 18, 2024 and sell it today you would earn a total of  652.00  from holding Bankers Investment Trust or generate 5.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Bankers Investment Trust  vs.  Ross Stores

 Performance 
       Timeline  
Bankers Investment Trust 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Bankers Investment Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bankers Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Ross Stores 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Bankers Investment and Ross Stores Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bankers Investment and Ross Stores

The main advantage of trading using opposite Bankers Investment and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankers Investment 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 Bankers Investment Trust 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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