Correlation Between Ross Stores and SBI Insurance

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

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

Diversification Opportunities for Ross Stores and SBI Insurance

-0.75

Correlation Coefficient

Ross Stores  SBI Insurance

Pay attention - limited upside

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

Pair Corralation between Ross Stores and SBI Insurance

Assuming the 90 days trading horizon Ross Stores is expected to under-perform the SBI Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Ross Stores is 1.2 times less risky than SBI Insurance. The stock trades about -0.28 of its potential returns per unit of risk. The SBI Insurance Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  605.00  in SBI Insurance Group on December 21, 2024 and sell it today you would earn a total of  85.00  from holding SBI Insurance Group or generate 14.05% return on investment over 90 days.

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

Ross Stores  vs.  SBI Insurance Group

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. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SBI Insurance Group

Risk-Adjusted Performance

Good

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

Pair Trading with Ross Stores and SBI Insurance

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

The idea behind Ross Stores and SBI Insurance Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.