Correlation Between Plano Plano and Ross Stores

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

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

Diversification Opportunities for Plano Plano and Ross Stores

-0.74

Correlation Coefficient

Plano Plano  Ross Stores

Pay attention - limited upside

The 3 months correlation between Plano and Ross is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Plano Plano Desenvolvimento and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Plano Plano 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 Plano Plano Desenvolvimento 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 Plano Plano i.e., Plano Plano and Ross Stores go up and down completely randomly.

Pair Corralation between Plano Plano and Ross Stores

Assuming the 90 days trading horizon Plano Plano Desenvolvimento is expected to under-perform the Ross Stores. In addition to that, Plano Plano is 1.49 times more volatile than Ross Stores. It trades about -0.09 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.09 per unit of volatility. If you would invest  42,376  in Ross Stores on September 14, 2024 and sell it today you would earn a total of  3,612  from holding Ross Stores or generate 8.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Plano Plano Desenvolvimento  vs.  Ross Stores

Plano Plano Desenvol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plano Plano Desenvolvimento has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ross Stores

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ross Stores may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Plano Plano and Ross Stores

The main advantage of trading using opposite Plano Plano and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plano Plano 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 Plano Plano Desenvolvimento 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.