Correlation Between Ross Stores and Duluth Holdings

Can any of the company-specific risk be diversified away by investing in both Ross Stores and Duluth 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 Duluth 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 Duluth Holdings, you can compare the effects of market volatilities on Ross Stores and Duluth 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 Duluth Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Duluth Holdings.

Diversification Opportunities for Ross Stores and Duluth Holdings

0.45

Correlation Coefficient

Ross Stores  Duluth Holdings

Very weak diversification

The 3 months correlation between Ross and Duluth is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Duluth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duluth Holdings 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 Duluth Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duluth Holdings has no effect on the direction of Ross Stores i.e., Ross Stores and Duluth Holdings go up and down completely randomly.

Pair Corralation between Ross Stores and Duluth Holdings

Given the investment horizon of 90 days Ross Stores is expected to generate 0.45 times more return on investment than Duluth Holdings. However, Ross Stores is 2.22 times less risky than Duluth Holdings. It trades about -0.15 of its potential returns per unit of risk. Duluth Holdings is currently generating about -0.2 per unit of risk. If you would invest  15,451  in Ross Stores on November 29, 2024 and sell it today you would lose (1,573) from holding Ross Stores or give up 10.18% of portfolio value over 90 days.

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

Ross Stores  vs.  Duluth Holdings

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 latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Duluth Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Duluth Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Ross Stores and Duluth Holdings

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

The idea behind Ross Stores and Duluth Holdings 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.