Correlation Between Ross Stores and Annaly Capital

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

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

Diversification Opportunities for Ross Stores and Annaly Capital

0.81

Correlation Coefficient

Ross Stores  Annaly Capital

Very poor diversification

The 3 months correlation between Ross and Annaly is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Annaly Capital Management, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Manag 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 Annaly Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annaly Capital Manag has no effect on the direction of Ross Stores i.e., Ross Stores and Annaly Capital go up and down completely randomly.

Pair Corralation between Ross Stores and Annaly Capital

Assuming the 90 days trading horizon Ross Stores is expected to generate 0.97 times more return on investment than Annaly Capital. However, Ross Stores is 1.03 times less risky than Annaly Capital. It trades about 0.07 of its potential returns per unit of risk. Annaly Capital Management, is currently generating about 0.03 per unit of risk. If you would invest  29,210  in Ross Stores on October 11, 2024 and sell it today you would earn a total of  16,422  from holding Ross Stores or generate 56.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	89.18%
Values	Daily Returns

Ross Stores  vs.  Annaly Capital Management,

Ross Stores

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ross Stores sustained solid returns over the last few months and may actually be approaching a breakup point.

Annaly Capital Manag

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Annaly Capital Management, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Annaly Capital 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 Annaly Capital

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

The idea behind Ross Stores and Annaly Capital Management, 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.