Correlation Between Southern Copper and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Southern Copper and Ross Stores 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 Southern Copper and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper and Ross Stores, you can compare the effects of market volatilities on Southern Copper and Ross Stores 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 Southern Copper with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Ross Stores.
Diversification Opportunities for Southern Copper and Ross Stores
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Southern and Ross is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Southern Copper 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 Southern Copper are associated (or correlated) with Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Southern Copper i.e., Southern Copper and Ross Stores go up and down completely randomly.
Pair Corralation between Southern Copper and Ross Stores
Assuming the 90 days trading horizon Southern Copper is expected to generate 0.62 times more return on investment than Ross Stores. However, Southern Copper is 1.6 times less risky than Ross Stores. It trades about -0.12 of its potential returns per unit of risk. Ross Stores is currently generating about -0.3 per unit of risk. If you would invest 207,258 in Southern Copper on December 2, 2024 and sell it today you would lose (16,258) from holding Southern Copper or give up 7.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 32.79% |
Values | Daily Returns |
Southern Copper vs. Ross Stores
Performance |
Timeline |
Southern Copper |
Ross Stores |
Southern Copper and Ross Stores Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Southern Copper and Ross Stores
The main advantage of trading using opposite Southern Copper and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.Southern Copper vs. CVS Health | Southern Copper vs. Air Transport Services | Southern Copper vs. McEwen Mining | Southern Copper vs. The Home Depot |
Ross Stores vs. Air Transport Services | Ross Stores vs. Grupo Industrial Saltillo | Ross Stores vs. DXC Technology | Ross Stores vs. Grupo Hotelero Santa |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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