Correlation Between Fast Retailing and Molson Coors
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Molson Coors 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 Molson Coors 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 Molson Coors Brewing, you can compare the effects of market volatilities on Fast Retailing and Molson Coors 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 Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Molson Coors.
Diversification Opportunities for Fast Retailing and Molson Coors
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fast and Molson is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Brewing has no effect on the direction of Fast Retailing i.e., Fast Retailing and Molson Coors go up and down completely randomly.
Pair Corralation between Fast Retailing and Molson Coors
Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 1.15 times more return on investment than Molson Coors. However, Fast Retailing is 1.15 times more volatile than Molson Coors Brewing. It trades about 0.07 of its potential returns per unit of risk. Molson Coors Brewing is currently generating about 0.01 per unit of risk. If you would invest 20,800 in Fast Retailing Co on August 29, 2024 and sell it today you would earn a total of 10,700 from holding Fast Retailing Co or generate 51.44% 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. Molson Coors Brewing
Performance |
| Timeline |
| Fast Retailing |
| Molson Coors Brewing |
Fast Retailing and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Molson Coors
The main advantage of trading using opposite Fast Retailing and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Molson Coors 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 Molson Coors will offset losses from the drop in Molson Coors' long position.| Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Microsoft | Fast Retailing vs. Microsoft |
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 Stocks Directory module to find actively traded stocks across global markets.
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