Correlation Between 1StdibsCom and Ross Stores

Can any of the company-specific risk be diversified away by investing in both 1StdibsCom 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 1StdibsCom and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for 1StdibsCom and Ross Stores

-0.22

Correlation Coefficient

1StdibsCom  Ross Stores

Very good diversification

The 3 months correlation between 1StdibsCom and Ross is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding 1StdibsCom and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and 1StdibsCom 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 1StdibsCom 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 1StdibsCom i.e., 1StdibsCom and Ross Stores go up and down completely randomly.

Pair Corralation between 1StdibsCom and Ross Stores

Given the investment horizon of 90 days 1StdibsCom is expected to under-perform the Ross Stores. In addition to that, 1StdibsCom is 1.72 times more volatile than Ross Stores. It trades about -0.12 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.0 per unit of volatility. If you would invest  14,963  in Ross Stores on September 23, 2024 and sell it today you would lose (48.00) from holding Ross Stores or give up 0.32% of portfolio value over 90 days.

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

1StdibsCom  vs.  Ross Stores

1StdibsCom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1StdibsCom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 1StdibsCom and Ross Stores

The main advantage of trading using opposite 1StdibsCom and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1StdibsCom 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 1StdibsCom 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.