Correlation Between Ross Stores and T.J. Maxx

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Can any of the company-specific risk be diversified away by investing in both Ross Stores and T.J. Maxx 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 T.J. Maxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and TJX Companies, you can compare the effects of market volatilities on Ross Stores and T.J. Maxx 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 T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and T.J. Maxx.

Diversification Opportunities for Ross Stores and T.J. Maxx

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Ross Stores and T.J. Maxx is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies 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 T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Ross Stores i.e., Ross Stores and T.J. Maxx go up and down completely randomly.

Pair Corralation between Ross Stores and T.J. Maxx

Given the investment horizon of 90 days Ross Stores is expected to generate 1.5 times more return on investment than T.J. Maxx. However, Ross Stores is 1.5 times more volatile than TJX Companies. It trades about 0.34 of its potential returns per unit of risk. TJX Companies is currently generating about 0.3 per unit of risk. If you would invest  9,460  in Ross Stores on August 28, 2022 and sell it today you would earn a total of  2,134  from holding Ross Stores or generate 22.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Ross Stores  vs.  TJX Companies

 Performance (%) 
       Timeline  
Ross Stores 
Ross Stores Performance
14 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively sluggish basic indicators, Ross Stores unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ross Stores Price Channel

TJX Companies 
T.J. Maxx Performance
16 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in TJX Companies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish forward-looking indicators, T.J. Maxx showed solid returns over the last few months and may actually be approaching a breakup point.

T.J. Maxx Price Channel

Ross Stores and T.J. Maxx Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ross Stores and T.J. Maxx

The main advantage of trading using opposite Ross Stores and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.
Ross Stores vs. Caleres
Ross Stores vs. Ever Glory Intl
The idea behind Ross Stores and TJX Companies 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.
T.J. Maxx vs. Caleres
T.J. Maxx vs. Ever Glory Intl
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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