Correlation Between Caseys General and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Caseys General 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 Caseys General and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caseys General Stores and Fast Retailing Co, you can compare the effects of market volatilities on Caseys General 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 Caseys General with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and Fast Retailing.
Diversification Opportunities for Caseys General and Fast Retailing
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Caseys and Fast is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and Caseys General 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 Caseys General Stores 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 Caseys General i.e., Caseys General and Fast Retailing go up and down completely randomly.
Pair Corralation between Caseys General and Fast Retailing
Assuming the 90 days trading horizon Caseys General Stores is expected to under-perform the Fast Retailing. In addition to that, Caseys General is 1.22 times more volatile than Fast Retailing Co. It trades about -0.23 of its total potential returns per unit of risk. Fast Retailing Co is currently generating about -0.01 per unit of volatility. If you would invest 29,616 in Fast Retailing Co on December 6, 2024 and sell it today you would lose (126.00) from holding Fast Retailing Co or give up 0.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. Fast Retailing Co
Performance |
| Timeline |
| Caseys General Stores |
| Fast Retailing |
Caseys General and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and Fast Retailing
The main advantage of trading using opposite Caseys General and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General 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.| Caseys General vs. MELIA HOTELS | ||
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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