Correlation Between Fast Retailing and Strategic Education
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Strategic Education 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 Strategic Education 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 Strategic Education, you can compare the effects of market volatilities on Fast Retailing and Strategic Education 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 Strategic Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Strategic Education.
Diversification Opportunities for Fast Retailing and Strategic Education
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fast and Strategic is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Education 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 Strategic Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Education has no effect on the direction of Fast Retailing i.e., Fast Retailing and Strategic Education go up and down completely randomly.
Pair Corralation between Fast Retailing and Strategic Education
Assuming the 90 days trading horizon Fast Retailing is expected to generate 10.57 times less return on investment than Strategic Education. But when comparing it to its historical volatility, Fast Retailing Co is 1.7 times less risky than Strategic Education. It trades about 0.03 of its potential returns per unit of risk. Strategic Education is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 7,950 in Strategic Education on August 28, 2024 and sell it today you would earn a total of 1,200 from holding Strategic Education or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. Strategic Education
Performance |
| Timeline |
| Fast Retailing |
| Strategic Education |
Fast Retailing and Strategic Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Strategic Education
The main advantage of trading using opposite Fast Retailing and Strategic Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Strategic Education 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 Strategic Education will offset losses from the drop in Strategic Education's long position.| Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Microsoft |
| Strategic Education vs. Perdoceo Education | Strategic Education vs. GREENX METALS LTD | Strategic Education vs. EMBARK EDUCATION LTD | Strategic Education vs. Perseus Mining Limited |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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