Correlation Between 90041LAF2 and Ross Stores

Can any of the company-specific risk be diversified away by investing in both 90041LAF2 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 90041LAF2 and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US90041LAF22 and Ross Stores, you can compare the effects of market volatilities on 90041LAF2 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 90041LAF2 with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of 90041LAF2 and Ross Stores.

Diversification Opportunities for 90041LAF2 and Ross Stores

-0.03

Correlation Coefficient

90041LAF2  Ross Stores

Good diversification

The 3 months correlation between 90041LAF2 and Ross is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding US90041LAF22 and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and 90041LAF2 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 US90041LAF22 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 90041LAF2 i.e., 90041LAF2 and Ross Stores go up and down completely randomly.

Pair Corralation between 90041LAF2 and Ross Stores

Assuming the 90 days trading horizon US90041LAF22 is expected to under-perform the Ross Stores. But the bond apears to be less risky and, when comparing its historical volatility, US90041LAF22 is 5.15 times less risky than Ross Stores. The bond trades about -0.28 of its potential returns per unit of risk. The Ross Stores is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  15,611  in Ross Stores on October 7, 2024 and sell it today you would lose (186.00) from holding Ross Stores or give up 1.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	55.0%
Values	Daily Returns

US90041LAF22  vs.  Ross Stores

US90041LAF22

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US90041LAF22 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 90041LAF2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ross Stores

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Ross Stores may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with 90041LAF2 and Ross Stores

The main advantage of trading using opposite 90041LAF2 and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 90041LAF2 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 US90041LAF22 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.