Correlation Between Ross Stores and CANON MARKETING

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

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

Diversification Opportunities for Ross Stores and CANON MARKETING

0.67

Correlation Coefficient

Ross Stores  CANON MARKETING

Poor diversification

The 3 months correlation between Ross and CANON is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and CANON MARKETING JP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANON MARKETING JP 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 CANON MARKETING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANON MARKETING JP has no effect on the direction of Ross Stores i.e., Ross Stores and CANON MARKETING go up and down completely randomly.

Pair Corralation between Ross Stores and CANON MARKETING

Assuming the 90 days trading horizon Ross Stores is expected to generate 2.4 times more return on investment than CANON MARKETING. However, Ross Stores is 2.4 times more volatile than CANON MARKETING JP. It trades about 0.25 of its potential returns per unit of risk. CANON MARKETING JP is currently generating about 0.45 per unit of risk. If you would invest  12,860  in Ross Stores on September 5, 2024 and sell it today you would earn a total of  1,906  from holding Ross Stores or generate 14.82% return on investment over 90 days.

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

Ross Stores  vs.  CANON MARKETING JP

Ross Stores

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ross Stores may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CANON MARKETING JP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CANON MARKETING JP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking indicators, CANON MARKETING may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ross Stores and CANON MARKETING

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

The idea behind Ross Stores and CANON MARKETING JP 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.