Correlation Between PROSIEBENSAT1 MEDIADR4/ and Ross Stores

Can any of the company-specific risk be diversified away by investing in both PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PROSIEBENSAT1 MEDIADR4 and Ross Stores, you can compare the effects of market volatilities on PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSIEBENSAT1 MEDIADR4/ and Ross Stores.

Diversification Opportunities for PROSIEBENSAT1 MEDIADR4/ and Ross Stores

-0.52

Correlation Coefficient

PROSIEBENSAT1 MEDIADR4/  Ross Stores

Excellent diversification

The 3 months correlation between PROSIEBENSAT1 and Ross is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding PROSIEBENSAT1 MEDIADR4 and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4/ i.e., PROSIEBENSAT1 MEDIADR4/ and Ross Stores go up and down completely randomly.

Pair Corralation between PROSIEBENSAT1 MEDIADR4/ and Ross Stores

Assuming the 90 days trading horizon PROSIEBENSAT1 MEDIADR4 is expected to generate 1.9 times more return on investment than Ross Stores. However, PROSIEBENSAT1 MEDIADR4/ is 1.9 times more volatile than Ross Stores. It trades about 0.13 of its potential returns per unit of risk. Ross Stores is currently generating about -0.03 per unit of risk. If you would invest  115.00  in PROSIEBENSAT1 MEDIADR4 on September 23, 2024 and sell it today you would earn a total of  10.00  from holding PROSIEBENSAT1 MEDIADR4 or generate 8.7% return on investment over 90 days.

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

PROSIEBENSAT1 MEDIADR4  vs.  Ross Stores

PROSIEBENSAT1 MEDIADR4/

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROSIEBENSAT1 MEDIADR4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, PROSIEBENSAT1 MEDIADR4/ 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

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Ross Stores may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PROSIEBENSAT1 MEDIADR4/ and Ross Stores

The main advantage of trading using opposite PROSIEBENSAT1 MEDIADR4/ and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4 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.