Correlation Between BRIT AMER and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both BRIT AMER and FAST RETAIL 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 BRIT AMER and FAST RETAIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIT AMER TOBACCO and FAST RETAIL ADR, you can compare the effects of market volatilities on BRIT AMER and FAST RETAIL 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 BRIT AMER with a short position of FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and FAST RETAIL.
Diversification Opportunities for BRIT AMER and FAST RETAIL
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BRIT and FAST is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR and BRIT AMER 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 BRIT AMER TOBACCO are associated (or correlated) with FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of BRIT AMER i.e., BRIT AMER and FAST RETAIL go up and down completely randomly.
Pair Corralation between BRIT AMER and FAST RETAIL
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 0.7 times more return on investment than FAST RETAIL. However, BRIT AMER TOBACCO is 1.43 times less risky than FAST RETAIL. It trades about 0.23 of its potential returns per unit of risk. FAST RETAIL ADR is currently generating about -0.16 per unit of risk. If you would invest 3,564 in BRIT AMER TOBACCO on November 2, 2024 and sell it today you would earn a total of 235.00 from holding BRIT AMER TOBACCO or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. FAST RETAIL ADR
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| FAST RETAIL ADR |
BRIT AMER and FAST RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and FAST RETAIL
The main advantage of trading using opposite BRIT AMER and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER position performs unexpectedly, FAST RETAIL 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 RETAIL will offset losses from the drop in FAST RETAIL's long position.| BRIT AMER vs. NAGOYA RAILROAD | BRIT AMER vs. TEXAS ROADHOUSE | BRIT AMER vs. BROADWIND ENRGY | BRIT AMER vs. SIEM OFFSHORE NEW |
| FAST RETAIL vs. CompuGroup Medical SE | FAST RETAIL vs. MeVis Medical Solutions | FAST RETAIL vs. Siamgas And Petrochemicals | FAST RETAIL vs. SOCKET MOBILE NEW |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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