Correlation Between Fast Retailing and SENECA FOODS-A
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and SENECA FOODS-A 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 SENECA FOODS-A 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 SENECA FOODS A, you can compare the effects of market volatilities on Fast Retailing and SENECA FOODS-A 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 SENECA FOODS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and SENECA FOODS-A.
Diversification Opportunities for Fast Retailing and SENECA FOODS-A
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fast and SENECA is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and SENECA FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SENECA FOODS A 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 SENECA FOODS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SENECA FOODS A has no effect on the direction of Fast Retailing i.e., Fast Retailing and SENECA FOODS-A go up and down completely randomly.
Pair Corralation between Fast Retailing and SENECA FOODS-A
Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 0.58 times more return on investment than SENECA FOODS-A. However, Fast Retailing Co is 1.73 times less risky than SENECA FOODS-A. It trades about 0.07 of its potential returns per unit of risk. SENECA FOODS A is currently generating about 0.03 per unit of risk. If you would invest 17,833 in Fast Retailing Co on October 11, 2024 and sell it today you would earn a total of 13,557 from holding Fast Retailing Co or generate 76.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. SENECA FOODS A
Performance |
| Timeline |
| Fast Retailing |
| SENECA FOODS A |
Fast Retailing and SENECA FOODS-A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and SENECA FOODS-A
The main advantage of trading using opposite Fast Retailing and SENECA FOODS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, SENECA FOODS-A 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 SENECA FOODS-A will offset losses from the drop in SENECA FOODS-A's long position.| Fast Retailing vs. Cardinal Health | Fast Retailing vs. AIR PRODCHEMICALS | Fast Retailing vs. Wenzhou Kangning Hospital | Fast Retailing vs. INSURANCE AUST GRP |
| SENECA FOODS-A vs. OPKO HEALTH | SENECA FOODS-A vs. Fast Retailing Co | SENECA FOODS-A vs. Retail Estates NV | SENECA FOODS-A vs. Molina Healthcare |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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