Correlation Between INVITATION HOMES and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both INVITATION HOMES and Fast Retailing 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 INVITATION HOMES and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INVITATION HOMES DL and Fast Retailing Co, you can compare the effects of market volatilities on INVITATION HOMES and Fast Retailing 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 INVITATION HOMES with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of INVITATION HOMES and Fast Retailing.
Diversification Opportunities for INVITATION HOMES and Fast Retailing
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INVITATION and Fast is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding INVITATION HOMES DL and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and INVITATION HOMES 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 INVITATION HOMES DL are associated (or correlated) with Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of INVITATION HOMES i.e., INVITATION HOMES and Fast Retailing go up and down completely randomly.
Pair Corralation between INVITATION HOMES and Fast Retailing
Assuming the 90 days horizon INVITATION HOMES DL is expected to generate 0.96 times more return on investment than Fast Retailing. However, INVITATION HOMES DL is 1.04 times less risky than Fast Retailing. It trades about 0.13 of its potential returns per unit of risk. Fast Retailing Co is currently generating about 0.05 per unit of risk. If you would invest 3,080 in INVITATION HOMES DL on August 29, 2024 and sell it today you would earn a total of 160.00 from holding INVITATION HOMES DL or generate 5.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INVITATION HOMES DL vs. Fast Retailing Co
Performance |
| Timeline |
| INVITATION HOMES |
| Fast Retailing |
INVITATION HOMES and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INVITATION HOMES and Fast Retailing
The main advantage of trading using opposite INVITATION HOMES and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INVITATION HOMES position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.| INVITATION HOMES vs. Superior Plus Corp | INVITATION HOMES vs. NMI Holdings | INVITATION HOMES vs. Origin Agritech | INVITATION HOMES vs. SIVERS SEMICONDUCTORS AB |
| Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Microsoft | Fast Retailing vs. Microsoft |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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