Correlation Between InPlay Oil and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both InPlay Oil 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 InPlay Oil and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and Fast Retailing Co, you can compare the effects of market volatilities on InPlay Oil 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 InPlay Oil with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Fast Retailing.
Diversification Opportunities for InPlay Oil and Fast Retailing
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between InPlay and Fast is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and InPlay Oil 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 InPlay Oil Corp 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 InPlay Oil i.e., InPlay Oil and Fast Retailing go up and down completely randomly.
Pair Corralation between InPlay Oil and Fast Retailing
Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the Fast Retailing. But the stock apears to be less risky and, when comparing its historical volatility, InPlay Oil Corp is 1.02 times less risky than Fast Retailing. The stock trades about -0.31 of its potential returns per unit of risk. The Fast Retailing Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 30,150 in Fast Retailing Co on September 19, 2024 and sell it today you would earn a total of 2,580 from holding Fast Retailing Co or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. Fast Retailing Co
Performance |
| Timeline |
| InPlay Oil Corp |
| Fast Retailing |
InPlay Oil and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Fast Retailing
The main advantage of trading using opposite InPlay Oil and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil 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.The idea behind InPlay Oil Corp and Fast Retailing Co 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.| Fast Retailing vs. EMBARK EDUCATION LTD | Fast Retailing vs. STRAYER EDUCATION | Fast Retailing vs. SEI INVESTMENTS | Fast Retailing vs. Apollo Investment Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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