Correlation Between Ross Stores and SSP Group

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

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

Diversification Opportunities for Ross Stores and SSP Group

0.36

Correlation Coefficient

Ross Stores  SSP Group

Weak diversification

The 3 months correlation between Ross and SSP is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and SSP Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSP Group PLC 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 SSP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSP Group PLC has no effect on the direction of Ross Stores i.e., Ross Stores and SSP Group go up and down completely randomly.

Pair Corralation between Ross Stores and SSP Group

Assuming the 90 days trading horizon Ross Stores is expected to generate 0.81 times more return on investment than SSP Group. However, Ross Stores is 1.23 times less risky than SSP Group. It trades about 0.1 of its potential returns per unit of risk. SSP Group PLC is currently generating about -0.17 per unit of risk. If you would invest  14,719  in Ross Stores on October 8, 2024 and sell it today you would earn a total of  315.00  from holding Ross Stores or generate 2.14% return on investment over 90 days.

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

Ross Stores  vs.  SSP Group PLC

Ross Stores

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Ross Stores unveiled solid returns over the last few months and may actually be approaching a breakup point.

SSP Group PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SSP Group PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SSP Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ross Stores and SSP Group

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

The idea behind Ross Stores and SSP Group PLC 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.