Correlation Between Ross Stores and Group 1
Can any of the company-specific risk be diversified away by investing in both Ross Stores and Group 1 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 Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Group 1 Automotive, you can compare the effects of market volatilities on Ross Stores and Group 1 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 Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Group 1.
Diversification Opportunities for Ross Stores and Group 1
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ross and Group is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive 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 Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Ross Stores i.e., Ross Stores and Group 1 go up and down completely randomly.
Pair Corralation between Ross Stores and Group 1
Given the investment horizon of 90 days Ross Stores is expected to generate 15.3 times less return on investment than Group 1. But when comparing it to its historical volatility, Ross Stores is 1.42 times less risky than Group 1. It trades about 0.01 of its potential returns per unit of risk. Group 1 Automotive is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 36,429 in Group 1 Automotive on September 15, 2024 and sell it today you would earn a total of 6,281 from holding Group 1 Automotive or generate 17.24% 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. Group 1 Automotive
Performance |
Timeline |
Ross Stores |
Group 1 Automotive |
Ross Stores and Group 1 Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ross Stores and Group 1
The main advantage of trading using opposite Ross Stores and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.Ross Stores vs. Capri Holdings | Ross Stores vs. Movado Group | Ross Stores vs. Tapestry | Ross Stores vs. Brilliant Earth Group |
Group 1 vs. Penske Automotive Group | Group 1 vs. Lithia Motors | Group 1 vs. AutoNation | Group 1 vs. Asbury Automotive Group |
Check out your portfolio center.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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