Correlation Between Fast Retailing and Sydbank AS
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Sydbank AS 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 Sydbank AS 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 Sydbank AS, you can compare the effects of market volatilities on Fast Retailing and Sydbank AS 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 Sydbank AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Sydbank AS.
Diversification Opportunities for Fast Retailing and Sydbank AS
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fast and Sydbank is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Sydbank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank AS 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 Sydbank AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank AS has no effect on the direction of Fast Retailing i.e., Fast Retailing and Sydbank AS go up and down completely randomly.
Pair Corralation between Fast Retailing and Sydbank AS
Assuming the 90 days trading horizon Fast Retailing is expected to generate 3.82 times less return on investment than Sydbank AS. But when comparing it to its historical volatility, Fast Retailing Co is 3.4 times less risky than Sydbank AS. It trades about 0.06 of its potential returns per unit of risk. Sydbank AS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,103 in Sydbank AS on November 1, 2024 and sell it today you would earn a total of 3,977 from holding Sydbank AS or generate 360.56% 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. Sydbank AS
Performance |
| Timeline |
| Fast Retailing |
| Sydbank AS |
Fast Retailing and Sydbank AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Sydbank AS
The main advantage of trading using opposite Fast Retailing and Sydbank AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Sydbank AS 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 Sydbank AS will offset losses from the drop in Sydbank AS's long position.| Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc |
| Sydbank AS vs. Fast Retailing Co | Sydbank AS vs. Retail Estates NV | Sydbank AS vs. MONEYSUPERMARKET | Sydbank AS vs. US FOODS HOLDING |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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