Correlation Between Canada Goose and Ross Stores

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

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

Diversification Opportunities for Canada Goose and Ross Stores

0.75

Correlation Coefficient

Canada Goose  Ross Stores

Poor diversification

The 3 months correlation between Canada and Ross is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Canada Goose Holdings and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Canada Goose 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 Canada Goose Holdings 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 Canada Goose i.e., Canada Goose and Ross Stores go up and down completely randomly.

Pair Corralation between Canada Goose and Ross Stores

Given the investment horizon of 90 days Canada Goose Holdings is expected to generate 1.99 times more return on investment than Ross Stores. However, Canada Goose is 1.99 times more volatile than Ross Stores. It trades about -0.18 of its potential returns per unit of risk. Ross Stores is currently generating about -0.49 per unit of risk. If you would invest  1,232  in Canada Goose Holdings on February 1, 2024 and sell it today you would lose (103.00) from holding Canada Goose Holdings or give up 8.36% of portfolio value over 90 days.

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

Canada Goose Holdings  vs.  Ross Stores

Canada Goose Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Goose Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Ross Stores

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ross Stores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Canada Goose and Ross Stores

The main advantage of trading using opposite Canada Goose and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canada Goose 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 Canada Goose Holdings 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.