Correlation Between Air New and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Air New 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 Air New and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and Fast Retailing Co, you can compare the effects of market volatilities on Air New 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 Air New with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Fast Retailing.
Diversification Opportunities for Air New and Fast Retailing
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Air and Fast is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and Air New 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 Air New Zealand 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 Air New i.e., Air New and Fast Retailing go up and down completely randomly.
Pair Corralation between Air New and Fast Retailing
Assuming the 90 days trading horizon Air New Zealand is expected to generate 1.35 times more return on investment than Fast Retailing. However, Air New is 1.35 times more volatile than Fast Retailing Co. It trades about 0.07 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 31.00 in Air New Zealand on October 30, 2024 and sell it today you would earn a total of 2.00 from holding Air New Zealand or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Fast Retailing Co
Performance |
| Timeline |
| Air New Zealand |
| Fast Retailing |
Air New and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Fast Retailing
The main advantage of trading using opposite Air New and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New 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.| Air New vs. Gladstone Investment | Air New vs. Apollo Investment Corp | Air New vs. Wayside Technology Group | Air New vs. AECOM TECHNOLOGY |
| Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc |
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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