Correlation Between Carters and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Carters 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 Carters and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carters and Fast Retailing Co, you can compare the effects of market volatilities on Carters 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 Carters with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carters and Fast Retailing.
Diversification Opportunities for Carters and Fast Retailing
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carters and Fast is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Carters and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and Carters 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 Carters 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 Carters i.e., Carters and Fast Retailing go up and down completely randomly.
Pair Corralation between Carters and Fast Retailing
Considering the 90-day investment horizon Carters is expected to under-perform the Fast Retailing. But the stock apears to be less risky and, when comparing its historical volatility, Carters is 1.2 times less risky than Fast Retailing. The stock trades about -0.1 of its potential returns per unit of risk. The Fast Retailing Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 32,490 in Fast Retailing Co on September 2, 2024 and sell it today you would lose (425.00) from holding Fast Retailing Co or give up 1.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carters vs. Fast Retailing Co
Performance |
| Timeline |
| Carters |
| Fast Retailing |
Carters and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carters and Fast Retailing
The main advantage of trading using opposite Carters and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carters 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.| Carters vs. Childrens Place | Carters vs. Gildan Activewear | Carters vs. Oxford Industries | Carters vs. Columbia Sportswear |
| Fast Retailing vs. Industria de Diseno | Fast Retailing vs. Shoe Carnival | Fast Retailing vs. Genesco | Fast Retailing vs. Ross Stores |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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