Correlation Between Ross Stores and Fibra UNO

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

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

Diversification Opportunities for Ross Stores and Fibra UNO

-0.51

Correlation Coefficient

Ross Stores  Fibra UNO

Excellent diversification

The 3 months correlation between Ross and Fibra is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Fibra UNO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra UNO and Ross Stores 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 Ross Stores are associated (or correlated) with Fibra UNO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra UNO has no effect on the direction of Ross Stores i.e., Ross Stores and Fibra UNO go up and down completely randomly.

Pair Corralation between Ross Stores and Fibra UNO

Assuming the 90 days trading horizon Ross Stores is expected to generate 1.71 times more return on investment than Fibra UNO. However, Ross Stores is 1.71 times more volatile than Fibra UNO. It trades about 0.12 of its potential returns per unit of risk. Fibra UNO is currently generating about -0.03 per unit of risk. If you would invest  297,216  in Ross Stores on September 13, 2024 and sell it today you would earn a total of  20,447  from holding Ross Stores or generate 6.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	36.07%
Values	Daily Returns

Ross Stores  vs.  Fibra UNO

Ross Stores

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Ross Stores has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Fibra UNO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fibra UNO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fibra UNO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ross Stores and Fibra UNO

The main advantage of trading using opposite Ross Stores and Fibra UNO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Fibra UNO 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 Fibra UNO will offset losses from the drop in Fibra UNO's long position.

The idea behind Ross Stores and Fibra UNO 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.