Correlation Between Ross Stores and RADIANCE HLDGS

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

By analyzing existing cross correlation between Ross Stores and RADIANCE HLDGS GRPHD 01, you can compare the effects of market volatilities on Ross Stores and RADIANCE HLDGS 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 RADIANCE HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and RADIANCE HLDGS.

Diversification Opportunities for Ross Stores and RADIANCE HLDGS

-0.24

Correlation Coefficient

Ross Stores  RADIANCE HLDGS

Very good diversification

The 3 months correlation between Ross and RADIANCE is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and RADIANCE HLDGS GRPHD 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RADIANCE HLDGS GRPHD 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 RADIANCE HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RADIANCE HLDGS GRPHD has no effect on the direction of Ross Stores i.e., Ross Stores and RADIANCE HLDGS go up and down completely randomly.

Pair Corralation between Ross Stores and RADIANCE HLDGS

Assuming the 90 days trading horizon Ross Stores is expected to generate 7.55 times less return on investment than RADIANCE HLDGS. But when comparing it to its historical volatility, Ross Stores is 5.01 times less risky than RADIANCE HLDGS. It trades about 0.06 of its potential returns per unit of risk. RADIANCE HLDGS GRPHD 01 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  28.00  in RADIANCE HLDGS GRPHD 01 on September 24, 2024 and sell it today you would earn a total of  9.00  from holding RADIANCE HLDGS GRPHD 01 or generate 32.14% return on investment over 90 days.

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

Ross Stores  vs.  RADIANCE HLDGS GRPHD 01

Ross Stores

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ross Stores may actually be approaching a critical reversion point that can send shares even higher in January 2025.

RADIANCE HLDGS GRPHD

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RADIANCE HLDGS GRPHD 01 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, RADIANCE HLDGS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ross Stores and RADIANCE HLDGS

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

The idea behind Ross Stores and RADIANCE HLDGS GRPHD 01 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.