Correlation Between Grupo Posadas and Ross Stores

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

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

Diversification Opportunities for Grupo Posadas and Ross Stores

-0.45

Correlation Coefficient

Grupo Posadas  Ross Stores

Very good diversification

The 3 months correlation between Grupo and Ross is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Posadas SAB and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Grupo Posadas 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 Grupo Posadas SAB 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 Grupo Posadas i.e., Grupo Posadas and Ross Stores go up and down completely randomly.

Pair Corralation between Grupo Posadas and Ross Stores

Assuming the 90 days trading horizon Grupo Posadas SAB is expected to generate 0.55 times more return on investment than Ross Stores. However, Grupo Posadas SAB is 1.81 times less risky than Ross Stores. It trades about 0.03 of its potential returns per unit of risk. Ross Stores is currently generating about -0.37 per unit of risk. If you would invest  2,490  in Grupo Posadas SAB on December 23, 2024 and sell it today you would earn a total of  40.00  from holding Grupo Posadas SAB or generate 1.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	40.98%
Values	Daily Returns

Grupo Posadas SAB  vs.  Ross Stores

Grupo Posadas SAB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Posadas SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Grupo Posadas is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Ross Stores

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Grupo Posadas and Ross Stores

The main advantage of trading using opposite Grupo Posadas and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Posadas 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 Grupo Posadas SAB 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.