Correlation Between Fast Retailing and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Chesapeake Utilities 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 Chesapeake Utilities 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 Chesapeake Utilities, you can compare the effects of market volatilities on Fast Retailing and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Chesapeake Utilities.
Diversification Opportunities for Fast Retailing and Chesapeake Utilities
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fast and Chesapeake is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of Fast Retailing i.e., Fast Retailing and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between Fast Retailing and Chesapeake Utilities
Assuming the 90 days trading horizon Fast Retailing Co is expected to under-perform the Chesapeake Utilities. In addition to that, Fast Retailing is 1.45 times more volatile than Chesapeake Utilities. It trades about -0.12 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.11 per unit of volatility. If you would invest 11,700 in Chesapeake Utilities on November 28, 2024 and sell it today you would earn a total of 300.00 from holding Chesapeake Utilities or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. Chesapeake Utilities
Performance |
| Timeline |
| Fast Retailing |
| Chesapeake Utilities |
Fast Retailing and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Chesapeake Utilities
The main advantage of trading using opposite Fast Retailing and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| Fast Retailing vs. CHIBA BANK | Fast Retailing vs. BIOPHARMA CREDIT DL | Fast Retailing vs. Chengdu PUTIAN Telecommunications | Fast Retailing vs. CREDIT AGRICOLE |
| Chesapeake Utilities vs. Autohome | Chesapeake Utilities vs. PRECISION DRILLING P | Chesapeake Utilities vs. PLAYMATES HLDGS NEW | Chesapeake Utilities vs. SHELF DRILLING LTD |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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