Correlation Between Dow Jones and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Fast Retailing Co, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Fast Retailing.
Diversification Opportunities for Dow Jones and Fast Retailing
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Fast is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Fast Retailing go up and down completely randomly.
Pair Corralation between Dow Jones and Fast Retailing
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Fast Retailing. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 1.89 times less risky than Fast Retailing. The index trades about -0.27 of its potential returns per unit of risk. The Fast Retailing Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 33,530 in Fast Retailing Co on October 7, 2024 and sell it today you would lose (550.00) from holding Fast Retailing Co or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Dow Jones Industrial vs. Fast Retailing Co
Performance |
| Timeline |
Dow Jones and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Fast Retailing Co
Pair trading matchups for Fast Retailing
Pair Trading with Dow Jones and Fast Retailing
The main advantage of trading using opposite Dow Jones and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. NetSol Technologies | Dow Jones vs. Q2 Holdings | Dow Jones vs. Weyco Group | Dow Jones vs. Newell Brands |
| Fast Retailing vs. Urban Outfitters | Fast Retailing vs. Superior Plus Corp | Fast Retailing vs. NMI Holdings | Fast Retailing vs. SIVERS SEMICONDUCTORS AB |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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