Should we be acquiring Coca Cola or Ross Stores?

It looks like Coca Cola will continue to recover much faster as its share price surged up 0.64% today to Ross Stores's 2.0395%. As many rational traders are trying to avoid consumer cyclical space, it makes sense to review Ross Stores a little further and understand how it stands against Coca Cola and other similar entities. We are going to break down some of the competitive aspects of both Ross Stores and Coca Cola.
Published over a year ago
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Reviewed by Rifka Kats

By analyzing existing basic indicators between Ross Stores and Coca Cola, you can compare the effects of market volatilities on both companies' prices and check if they can diversify away market risk if combined in one of your portfolios. You can also utilize pair trading strategies for matching a long position in Coca Cola with a short position in Ross Stores. Check out our pair correlation module for more information.

Let's begin by analyzing the assets.
The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Ross Stores has an asset utilization ratio of 312.17 percent. This implies that the company is making $3.12 for each dollar of assets. An increasing asset utilization means that Ross Stores is more efficient with each dollar of assets it utilizes for everyday operations.
Out of tens of thousands of stocks, funds, and ETFs that trade on global exchanges each represent an individual company which you can analyze using comparative analysis. To determine which one of the two entities, such as Dreyfus or Vanguard is a better fit for your portfolio, analyzing a few basic fundamental indicators is a good first step.

Correlation Between Dreyfus and Vanguard Mid-cap Index

In general, Fund analysis is a method for investors and traders to make individual buying and selling decisions. Mutual Fund correlation analysis is also essential because it can help investors realize that they may not be as diversified as they think. Risk management strategies are usually required to make sure all portfolios are properly aligned against their risk tolerance level. You can consider holding Dreyfus Active together with similar or unrelated positions with a negative correlation. For example, you can also add Vanguard Mid-cap to your portfolio. If Vanguard Mid-cap is not perfectly correlated to Dreyfus Active it will diversify some of the market risks out of the positively correlated stocks in your portfolio. However, the disadvantage of this sort of hedging is that it can potentially affect your investment returns throughout market cycles. When Dreyfus Active, for example, performs excellent and delivers stable returns, the negatively correlated position you locked in as a hedge may drag your returns down.
Are you currently holding both Dreyfus Active and Vanguard Mid-cap in your portfolio? Please note if you are using this as a pair-trade strategy between Dreyfus Active and Vanguard Mid-cap, watch out for correlation discrepancy over time. Relying on the historical price correlations and assuming that it will not change may lead to short-term losses. Please check pair correlation details between DNLCX and VIMSX for more information.

Sector Allocation

Exchange-Traded Funds use many different techniques to achieve diversification. One of the ways Dreyfus Active ETF is managing risk is by picking assets from different sectors and across various asset classes. It helps to ensure that returns are uncorrelated, and risk is spread across the underlying asset classes and industries. Within the same asset class, diversification can be achieved by investing in various investment styles through cross-sector allocation. Below map breaks down Dreyfus Active sector allocation.
Volatility

Instrument Allocation

The asset allocation of funds such as Dreyfus Active usually varies among a different mix of asset classes. Balanced mutual funds invest not only in bonds, which focus primarily on income, and stocks, which aim for investment growth, but also keep some reserve in cash or even exotic instruments. Below we show the current asset allocation of Dreyfus Active Midcap
Details

Is Dreyfus Active valued reasonably by the market?

Revenue is income that a firm generates from business activities such us rendering services or selling goods to customers. It is a crucial part of a business and an essential item when evaluating a company's financial statements. Revenues from a firm's primary business operations can be reported on the income statement as sales revenue, net sales, or simply sales, depending on the industry in which a given company operates.
Revenue is typically recorded when cash or cash equivalents are exchanged for services or goods and can include product or services discounts, promotions, as well as early payments on invoices or services rendered in advance.

Revenue Breakdown

Now, let's check Ross Stores revenue. Based on the latest financial disclosure, Ross Stores reported 15.2 B of revenue. This is 113.19% higher than that of the Consumer Cyclical sector and significantly higher than that of the Apparel Retail industry. The revenue for all United States stocks is 61.1% lower than that of the stock. As for Coca Cola we see revenue of 33.43 B, which is much higher than that of the Apparel Retail
Ross Stores15.2 Billion
Sector0.0
Coca Cola33.43 Billion
15.2 B
Ross Stores
Sector
33.4 B
Coca Cola

Another 3 percent gain for Ross Stores

Newest Jensen Alpha is up to -0.1. Price may drop again.
As of the 19th of August, Ross Stores holds the risk adjusted performance of (0.009835), and Coefficient Of Variation of (4,236). Compared to fundamental indicators, the technical analysis model allows you to check existing technical drivers of Ross Stores, as well as the relationship between them. Put it differently, you can use this information to find out if the company will indeed mirror its model of past market data, or the prices will eventually revert. We are able to interpolate and collect nineteen technical drivers for Ross Stores, which can be compared to its competitors. Please check Ross Stores information ratio and downside variance to decide if Ross Stores is priced some-what accurately, providing market reflects its current price of 126.58 per share. Given that Ross Stores has jensen alpha of (0.1), we recommend you to check out Ross Stores's recent market performance to make sure the company can sustain itself at a future point.

Our Bottom Line On Ross Stores

Whereas other companies within the apparel retail industry are still a little expensive, even after the recent corrections, Ross Stores may offer a potential longer-term growth to private investors. On the whole, as of the 19th of August 2021, we believe that at this point, Ross Stores is fairly valued with low probability of distress within the next 2 years. Our final buy vs. sell advice on the firm is Strong Buy.

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Dreyfus Active Midcap. Please refer to our Terms of Use for any information regarding our disclosure principles.

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