Correlation Between Fast Retailing and HEINEKEN
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and HEINEKEN 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 HEINEKEN 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 HEINEKEN SP ADR, you can compare the effects of market volatilities on Fast Retailing and HEINEKEN 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 HEINEKEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and HEINEKEN.
Diversification Opportunities for Fast Retailing and HEINEKEN
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fast and HEINEKEN is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and HEINEKEN SP ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEINEKEN SP ADR 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 HEINEKEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEINEKEN SP ADR has no effect on the direction of Fast Retailing i.e., Fast Retailing and HEINEKEN go up and down completely randomly.
Pair Corralation between Fast Retailing and HEINEKEN
Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 1.65 times more return on investment than HEINEKEN. However, Fast Retailing is 1.65 times more volatile than HEINEKEN SP ADR. It trades about 0.16 of its potential returns per unit of risk. HEINEKEN SP ADR is currently generating about -0.32 per unit of risk. If you would invest 29,770 in Fast Retailing Co on September 4, 2024 and sell it today you would earn a total of 1,780 from holding Fast Retailing Co or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fast Retailing Co vs. HEINEKEN SP ADR
Performance |
| Timeline |
| Fast Retailing |
| HEINEKEN SP ADR |
Fast Retailing and HEINEKEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and HEINEKEN
The main advantage of trading using opposite Fast Retailing and HEINEKEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, HEINEKEN 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 HEINEKEN will offset losses from the drop in HEINEKEN's long position.| Fast Retailing vs. TOTAL GABON | Fast Retailing vs. Walgreens Boots Alliance | Fast Retailing vs. Peak Resources Limited |
| HEINEKEN vs. EPSILON HEALTHCARE LTD | HEINEKEN vs. Sabra Health Care | HEINEKEN vs. National Health Investors | HEINEKEN vs. SHIP HEALTHCARE HLDGINC |
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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