Correlation Between Ross Stores and FAST RETAILCOSPHDR

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

By analyzing existing cross correlation between Ross Stores and FAST RETAILCOSPHDR 1, you can compare the effects of market volatilities on Ross Stores and FAST RETAILCOSPHDR 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 FAST RETAILCOSPHDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and FAST RETAILCOSPHDR.

Diversification Opportunities for Ross Stores and FAST RETAILCOSPHDR

0.75

Correlation Coefficient

Ross Stores  FAST RETAILCOSPHDR

Poor diversification

The 3 months correlation between Ross and FAST is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and FAST RETAILCOSPHDR 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAILCOSPHDR 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 FAST RETAILCOSPHDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAILCOSPHDR has no effect on the direction of Ross Stores i.e., Ross Stores and FAST RETAILCOSPHDR go up and down completely randomly.

Pair Corralation between Ross Stores and FAST RETAILCOSPHDR

Assuming the 90 days horizon Ross Stores is expected to under-perform the FAST RETAILCOSPHDR. But the stock apears to be less risky and, when comparing its historical volatility, Ross Stores is 1.47 times less risky than FAST RETAILCOSPHDR. The stock trades about -0.17 of its potential returns per unit of risk. The FAST RETAILCOSPHDR 1 is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  312.00  in FAST RETAILCOSPHDR 1 on December 28, 2024 and sell it today you would lose (38.00) from holding FAST RETAILCOSPHDR 1 or give up 12.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Ross Stores  vs.  FAST RETAILCOSPHDR 1

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

FAST RETAILCOSPHDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days FAST RETAILCOSPHDR 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Ross Stores and FAST RETAILCOSPHDR

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

The idea behind Ross Stores and FAST RETAILCOSPHDR 1 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..