Correlation Between National Retail and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both National Retail 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 National Retail and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and Fast Retailing Co, you can compare the effects of market volatilities on National Retail 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 National Retail with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and Fast Retailing.
Diversification Opportunities for National Retail and Fast Retailing
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Fast is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and National Retail 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 National Retail Properties 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 National Retail i.e., National Retail and Fast Retailing go up and down completely randomly.
Pair Corralation between National Retail and Fast Retailing
Assuming the 90 days trading horizon National Retail Properties is expected to under-perform the Fast Retailing. In addition to that, National Retail is 1.17 times more volatile than Fast Retailing Co. It trades about -0.08 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 29,930 in Fast Retailing Co on August 25, 2024 and sell it today you would earn a total of 50.00 from holding Fast Retailing Co or generate 0.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
National Retail Properties vs. Fast Retailing Co
Performance |
| Timeline |
| National Retail Prop |
| Fast Retailing |
National Retail and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and Fast Retailing
The main advantage of trading using opposite National Retail and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail 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.| National Retail vs. Q2M Managementberatung AG | National Retail vs. JJ SNACK FOODS | National Retail vs. Corporate Travel Management | National Retail vs. PT Indofood Sukses |
| Fast Retailing vs. Autohome ADR | Fast Retailing vs. KB HOME | Fast Retailing vs. Sqs Software Quality | Fast Retailing vs. Alfa Financial Software |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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