Correlation Between Ross Stores and Distoken Acquisition

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

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

Diversification Opportunities for Ross Stores and Distoken Acquisition

0.59

Correlation Coefficient

Ross Stores  Distoken Acquisition

Very weak diversification

The 3 months correlation between Ross and Distoken is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Distoken Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distoken Acquisition 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 Distoken Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distoken Acquisition has no effect on the direction of Ross Stores i.e., Ross Stores and Distoken Acquisition go up and down completely randomly.

Pair Corralation between Ross Stores and Distoken Acquisition

Given the investment horizon of 90 days Ross Stores is expected to generate 22.0 times less return on investment than Distoken Acquisition. But when comparing it to its historical volatility, Ross Stores is 35.7 times less risky than Distoken Acquisition. It trades about 0.08 of its potential returns per unit of risk. Distoken Acquisition is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Distoken Acquisition on October 5, 2024 and sell it today you would earn a total of  1,120  from holding Distoken Acquisition or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.8%
Values	Daily Returns

Ross Stores  vs.  Distoken Acquisition

Ross Stores

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Ross Stores may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Distoken Acquisition

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Distoken Acquisition are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Distoken Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ross Stores and Distoken Acquisition

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

The idea behind Ross Stores and Distoken Acquisition 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.