Correlation Between Fast Retailing and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and International Consolidated 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 International Consolidated 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 International Consolidated Airlines, you can compare the effects of market volatilities on Fast Retailing and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and International Consolidated.
Diversification Opportunities for Fast Retailing and International Consolidated
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fast and International is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Fast Retailing i.e., Fast Retailing and International Consolidated go up and down completely randomly.
Pair Corralation between Fast Retailing and International Consolidated
Assuming the 90 days trading horizon Fast Retailing is expected to generate 3.03 times less return on investment than International Consolidated. But when comparing it to its historical volatility, Fast Retailing Co is 1.33 times less risky than International Consolidated. It trades about 0.18 of its potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 253.00 in International Consolidated Airlines on September 3, 2024 and sell it today you would earn a total of 58.00 from holding International Consolidated Airlines or generate 22.92% 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. International Consolidated Air
Performance |
| Timeline |
| Fast Retailing |
| International Consolidated |
Fast Retailing and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and International Consolidated
The main advantage of trading using opposite Fast Retailing and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| Fast Retailing vs. TOTAL GABON | Fast Retailing vs. Walgreens Boots Alliance | Fast Retailing vs. Peak Resources Limited |
| International Consolidated vs. Delta Air Lines | International Consolidated vs. AIR CHINA LTD | International Consolidated vs. RYANAIR HLDGS ADR | International Consolidated vs. Southwest Airlines Co |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |