Correlation Between BW Offshore and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both BW Offshore 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 BW Offshore and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore Limited and Fast Retailing Co, you can compare the effects of market volatilities on BW Offshore 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 BW Offshore with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Fast Retailing.
Diversification Opportunities for BW Offshore and Fast Retailing
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between BWOFY and Fast is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and BW Offshore 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 BW Offshore Limited 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 BW Offshore i.e., BW Offshore and Fast Retailing go up and down completely randomly.
Pair Corralation between BW Offshore and Fast Retailing
Assuming the 90 days horizon BW Offshore is expected to generate 1.93 times less return on investment than Fast Retailing. But when comparing it to its historical volatility, BW Offshore Limited is 1.98 times less risky than Fast Retailing. It trades about 0.07 of its potential returns per unit of risk. Fast Retailing Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 23,901 in Fast Retailing Co on September 12, 2024 and sell it today you would earn a total of 9,689 from holding Fast Retailing Co or generate 40.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.38% |
| Values | Daily Returns |
BW Offshore Limited vs. Fast Retailing Co
Performance |
| Timeline |
| BW Offshore Limited |
| Fast Retailing |
BW Offshore and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Fast Retailing
The main advantage of trading using opposite BW Offshore and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore 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.| BW Offshore vs. Legacy Education | BW Offshore vs. Apple Inc | BW Offshore vs. NVIDIA | BW Offshore vs. Microsoft |
| Fast Retailing vs. Industria de Diseno | Fast Retailing vs. Aritzia | Fast Retailing vs. Shoe Carnival | Fast Retailing vs. Genesco |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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