Correlation Between Fast Retailing and De Grey
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and De Grey 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 De Grey 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 De Grey Mining, you can compare the effects of market volatilities on Fast Retailing and De Grey 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 De Grey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and De Grey.
Diversification Opportunities for Fast Retailing and De Grey
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fast and DGD is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and De Grey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Grey Mining 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 De Grey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Grey Mining has no effect on the direction of Fast Retailing i.e., Fast Retailing and De Grey go up and down completely randomly.
Pair Corralation between Fast Retailing and De Grey
Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 0.54 times more return on investment than De Grey. However, Fast Retailing Co is 1.85 times less risky than De Grey. It trades about 0.07 of its potential returns per unit of risk. De Grey Mining is currently generating about 0.03 per unit of risk. If you would invest 19,000 in Fast Retailing Co on November 2, 2024 and sell it today you would earn a total of 12,130 from holding Fast Retailing Co or generate 63.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. De Grey Mining
Performance |
| Timeline |
| Fast Retailing |
| De Grey Mining |
Fast Retailing and De Grey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and De Grey
The main advantage of trading using opposite Fast Retailing and De Grey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, De Grey 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 De Grey will offset losses from the drop in De Grey's long position.| Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc |
| De Grey vs. DENTSPLY SIRONA | De Grey vs. Olympic Steel | De Grey vs. JAPAN AIRLINES | De Grey vs. United Airlines Holdings |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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