Correlation Between Ross Stores and Sydbank

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

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

Diversification Opportunities for Ross Stores and Sydbank

0.51

Correlation Coefficient

Ross Stores  Sydbank

Very weak diversification

The 3 months correlation between Ross and Sydbank is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Sydbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank 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 Sydbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank has no effect on the direction of Ross Stores i.e., Ross Stores and Sydbank go up and down completely randomly.

Pair Corralation between Ross Stores and Sydbank

Assuming the 90 days trading horizon Ross Stores is expected to under-perform the Sydbank. But the stock apears to be less risky and, when comparing its historical volatility, Ross Stores is 1.93 times less risky than Sydbank. The stock trades about -0.06 of its potential returns per unit of risk. The Sydbank is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  34,760  in Sydbank on September 28, 2024 and sell it today you would earn a total of  2,290  from holding Sydbank or generate 6.59% return on investment over 90 days.

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

Ross Stores  vs.  Sydbank

Ross Stores

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ross Stores is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Sydbank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sydbank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ross Stores and Sydbank

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

The idea behind Ross Stores and Sydbank 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.