Correlation Between Ross Stores and UTStarcom Holdings

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

By analyzing existing cross correlation between Ross Stores and UTStarcom Holdings Corp, you can compare the effects of market volatilities on Ross Stores and UTStarcom Holdings 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 UTStarcom Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and UTStarcom Holdings.

Diversification Opportunities for Ross Stores and UTStarcom Holdings

-0.43

Correlation Coefficient

Ross Stores  UTStarcom Holdings

Very good diversification

The 3 months correlation between Ross and UTStarcom is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and UTStarcom Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTStarcom Holdings Corp 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 UTStarcom Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTStarcom Holdings Corp has no effect on the direction of Ross Stores i.e., Ross Stores and UTStarcom Holdings go up and down completely randomly.

Pair Corralation between Ross Stores and UTStarcom Holdings

Assuming the 90 days trading horizon Ross Stores is expected to generate 1.11 times more return on investment than UTStarcom Holdings. However, Ross Stores is 1.11 times more volatile than UTStarcom Holdings Corp. It trades about 0.1 of its potential returns per unit of risk. UTStarcom Holdings Corp is currently generating about -0.03 per unit of risk. If you would invest  216,868  in Ross Stores on October 7, 2024 and sell it today you would earn a total of  96,532  from holding Ross Stores or generate 44.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	32.39%
Values	Daily Returns

Ross Stores  vs.  UTStarcom Holdings Corp

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.

UTStarcom Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UTStarcom Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, UTStarcom Holdings 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 UTStarcom Holdings

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

The idea behind Ross Stores and UTStarcom Holdings Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.