Correlation Between Ross Stores and Chicken Soup

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

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

Diversification Opportunities for Ross Stores and Chicken Soup

0.41

Correlation Coefficient

Ross Stores  Chicken Soup

Very weak diversification

The 3 months correlation between Ross and Chicken is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Chicken Soup for in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicken Soup for 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 Chicken Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicken Soup for has no effect on the direction of Ross Stores i.e., Ross Stores and Chicken Soup go up and down completely randomly.

Pair Corralation between Ross Stores and Chicken Soup

Given the investment horizon of 90 days Ross Stores is expected to generate 13.51 times less return on investment than Chicken Soup. But when comparing it to its historical volatility, Ross Stores is 19.63 times less risky than Chicken Soup. It trades about 0.03 of its potential returns per unit of risk. Chicken Soup for is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Chicken Soup for on September 3, 2024 and sell it today you would lose (1.90) from holding Chicken Soup for or give up 95.0% of portfolio value over 90 days.

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

Ross Stores  vs.  Chicken Soup for

Ross Stores

Risk-Adjusted Performance

2 of 100

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.

Chicken Soup for

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chicken Soup for are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Chicken Soup reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ross Stores and Chicken Soup

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

The idea behind Ross Stores and Chicken Soup for 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.