Correlation Between Carnegie Clean and Ross Stores

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

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

Diversification Opportunities for Carnegie Clean and Ross Stores

0.2

Correlation Coefficient

Carnegie Clean  Ross Stores

Modest diversification

The 3 months correlation between Carnegie and Ross is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Carnegie Clean 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 Carnegie Clean Energy 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 Carnegie Clean i.e., Carnegie Clean and Ross Stores go up and down completely randomly.

Pair Corralation between Carnegie Clean and Ross Stores

Assuming the 90 days trading horizon Carnegie Clean Energy is expected to under-perform the Ross Stores. In addition to that, Carnegie Clean is 1.58 times more volatile than Ross Stores. It trades about 0.0 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.14 per unit of volatility. If you would invest  12,950  in Ross Stores on October 9, 2024 and sell it today you would earn a total of  2,002  from holding Ross Stores or generate 15.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Carnegie Clean Energy  vs.  Ross Stores

Carnegie Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carnegie Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Carnegie Clean 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

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 10 (%) 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 Carnegie Clean and Ross Stores

The main advantage of trading using opposite Carnegie Clean and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnegie Clean 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 Carnegie Clean Energy 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.