Correlation Between IShares Trust and Ross Stores

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

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

Diversification Opportunities for IShares Trust and Ross Stores

0.0

Correlation Coefficient

IShares Trust  Ross Stores

Pay attention - limited upside

The 3 months correlation between IShares and Ross is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and IShares Trust 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 iShares 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 IShares Trust i.e., IShares Trust and Ross Stores go up and down completely randomly.

Pair Corralation between IShares Trust and Ross Stores

If you would invest  270,769  in Ross Stores on October 7, 2024 and sell it today you would earn a total of  42,631  from holding Ross Stores or generate 15.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.0%
Values	Daily Returns

iShares Trust   vs.  Ross Stores

iShares Trust

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days iShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, IShares Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ross Stores

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Ross Stores showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Trust and Ross Stores

The main advantage of trading using opposite IShares Trust and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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 iShares 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.