Correlation Between Ross Stores and Genesco

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

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

Diversification Opportunities for Ross Stores and Genesco

0.87

Correlation Coefficient

Ross Stores  Genesco

Very poor diversification

The 3 months correlation between Ross and Genesco is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Genesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesco 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 Genesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesco has no effect on the direction of Ross Stores i.e., Ross Stores and Genesco go up and down completely randomly.

Pair Corralation between Ross Stores and Genesco

Assuming the 90 days horizon Ross Stores is expected to generate 1.84 times less return on investment than Genesco. But when comparing it to its historical volatility, Ross Stores is 2.46 times less risky than Genesco. It trades about 0.07 of its potential returns per unit of risk. Genesco is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,280  in Genesco on October 22, 2024 and sell it today you would earn a total of  1,620  from holding Genesco or generate 71.05% return on investment over 90 days.

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

Ross Stores  vs.  Genesco

Ross Stores

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Ross Stores may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Genesco

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genesco are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Genesco reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ross Stores and Genesco

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

The idea behind Ross Stores and Genesco 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.