Correlation Between Fast Retailing and Media
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Media 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 Media 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 Media and Games, you can compare the effects of market volatilities on Fast Retailing and Media 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 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Media.
Diversification Opportunities for Fast Retailing and Media
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fast and Media is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Media and Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media and Games 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 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media and Games has no effect on the direction of Fast Retailing i.e., Fast Retailing and Media go up and down completely randomly.
Pair Corralation between Fast Retailing and Media
Assuming the 90 days trading horizon Fast Retailing is expected to generate 4.09 times less return on investment than Media. But when comparing it to its historical volatility, Fast Retailing Co is 2.1 times less risky than Media. It trades about 0.09 of its potential returns per unit of risk. Media and Games is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 85.00 in Media and Games on September 3, 2024 and sell it today you would earn a total of 268.00 from holding Media and Games or generate 315.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. Media and Games
Performance |
| Timeline |
| Fast Retailing |
| Media and Games |
Fast Retailing and Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Media
The main advantage of trading using opposite Fast Retailing and Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Media 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 Media will offset losses from the drop in Media's long position.| Fast Retailing vs. TOTAL GABON | Fast Retailing vs. Walgreens Boots Alliance | Fast Retailing vs. Peak Resources Limited |
| Media vs. Rocket Internet SE | Media vs. Superior Plus Corp | Media vs. NMI Holdings | Media vs. Origin Agritech |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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