Correlation Between Fast Retailing and GB Group
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and GB Group 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 Fast Retailing and GB Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Retailing Co and GB Group plc, you can compare the effects of market volatilities on Fast Retailing and GB Group 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 Fast Retailing with a short position of GB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and GB Group.
Diversification Opportunities for Fast Retailing and GB Group
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fast and 0GB is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and GB Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GB Group plc and Fast Retailing 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 Fast Retailing Co are associated (or correlated) with GB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GB Group plc has no effect on the direction of Fast Retailing i.e., Fast Retailing and GB Group go up and down completely randomly.
Pair Corralation between Fast Retailing and GB Group
Assuming the 90 days trading horizon Fast Retailing Co is expected to under-perform the GB Group. In addition to that, Fast Retailing is 1.5 times more volatile than GB Group plc. It trades about -0.16 of its total potential returns per unit of risk. GB Group plc is currently generating about -0.06 per unit of volatility. If you would invest 408.00 in GB Group plc on October 23, 2024 and sell it today you would lose (8.00) from holding GB Group plc or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. GB Group plc
Performance |
| Timeline |
| Fast Retailing |
| GB Group plc |
Fast Retailing and GB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and GB Group
The main advantage of trading using opposite Fast Retailing and GB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, GB Group 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 GB Group will offset losses from the drop in GB Group's long position.| Fast Retailing vs. Air Lease | Fast Retailing vs. Pentair plc | Fast Retailing vs. United Rentals | Fast Retailing vs. Lendlease Group |
| GB Group vs. SIDETRADE EO 1 | GB Group vs. Scandinavian Tobacco Group | GB Group vs. Fast Retailing Co | GB Group vs. CVW CLEANTECH 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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