Correlation Between Apple and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Fast Retailing Co, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Fast Retailing.
Diversification Opportunities for Apple and Fast Retailing
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and Fast is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and Apple 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 Apple Inc 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 Apple i.e., Apple and Fast Retailing go up and down completely randomly.
Pair Corralation between Apple and Fast Retailing
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.95 times more return on investment than Fast Retailing. However, Apple Inc is 1.05 times less risky than Fast Retailing. It trades about 0.12 of its potential returns per unit of risk. Fast Retailing Co is currently generating about 0.1 per unit of risk. If you would invest 21,435 in Apple Inc on August 30, 2024 and sell it today you would earn a total of 790.00 from holding Apple Inc or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Fast Retailing Co
Performance |
| Timeline |
| Apple Inc |
| Fast Retailing |
Apple and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Fast Retailing
The main advantage of trading using opposite Apple and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. PLAYSTUDIOS A DL 0001 | Apple vs. COLUMBIA SPORTSWEAR | Apple vs. LG Display Co | Apple vs. Aedas Homes SA |
| Fast Retailing vs. Flutter Entertainment PLC | Fast Retailing vs. Nufarm Limited | Fast Retailing vs. TOWNSQUARE MEDIA INC | Fast Retailing vs. GigaMedia |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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