Correlation Between Ross Stores and Intel

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

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

Diversification Opportunities for Ross Stores and Intel

-0.46

Correlation Coefficient

Ross Stores  Intel

Very good diversification

The 3 months correlation between Ross and Intel is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Ross Stores i.e., Ross Stores and Intel go up and down completely randomly.

Pair Corralation between Ross Stores and Intel

Assuming the 90 days trading horizon Ross Stores is expected to under-perform the Intel. But the stock apears to be less risky and, when comparing its historical volatility, Ross Stores is 8.38 times less risky than Intel. The stock trades about -0.44 of its potential returns per unit of risk. The Intel is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,122  in Intel on October 25, 2024 and sell it today you would earn a total of  36.00  from holding Intel or generate 1.7% return on investment over 90 days.

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

Ross Stores  vs.  Intel

Ross Stores

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ross Stores may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Intel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Intel 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 Intel

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

The idea behind Ross Stores and Intel 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.