Correlation Between Freeport and Ross Stores

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

By analyzing existing cross correlation between Freeport McMoRan 545 percent and Ross Stores, you can compare the effects of market volatilities on Freeport 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 Freeport with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport and Ross Stores.

Diversification Opportunities for Freeport and Ross Stores

0.0

Correlation Coefficient

Freeport  Ross Stores

Pay attention - limited upside

The 3 months correlation between Freeport and Ross is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan 545 percent and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Freeport 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 Freeport McMoRan 545 percent 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 Freeport i.e., Freeport and Ross Stores go up and down completely randomly.

Pair Corralation between Freeport and Ross Stores

Assuming the 90 days trading horizon Freeport McMoRan 545 percent is expected to under-perform the Ross Stores. But the bond apears to be less risky and, when comparing its historical volatility, Freeport McMoRan 545 percent is 1.78 times less risky than Ross Stores. The bond trades about -0.17 of its potential returns per unit of risk. The Ross Stores is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  13,893  in Ross Stores on September 20, 2024 and sell it today you would earn a total of  886.00  from holding Ross Stores or generate 6.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Freeport McMoRan 545 percent  vs.  Ross Stores

Freeport McMoRan 545

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoRan 545 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Freeport McMoRan 545 percent investors.

Ross Stores

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, Ross Stores is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Freeport and Ross Stores

The main advantage of trading using opposite Freeport and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport 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.

The idea behind Freeport McMoRan 545 percent and Ross Stores 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.