Correlation Between Fast Retailing and BW OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and BW OFFSHORE 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 BW OFFSHORE 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 BW OFFSHORE LTD, you can compare the effects of market volatilities on Fast Retailing and BW OFFSHORE 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 BW OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and BW OFFSHORE.
Diversification Opportunities for Fast Retailing and BW OFFSHORE
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fast and XY81 is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and BW OFFSHORE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW OFFSHORE LTD 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 BW OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW OFFSHORE LTD has no effect on the direction of Fast Retailing i.e., Fast Retailing and BW OFFSHORE go up and down completely randomly.
Pair Corralation between Fast Retailing and BW OFFSHORE
Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 0.77 times more return on investment than BW OFFSHORE. However, Fast Retailing Co is 1.3 times less risky than BW OFFSHORE. It trades about 0.13 of its potential returns per unit of risk. BW OFFSHORE LTD is currently generating about 0.0 per unit of risk. If you would invest 23,900 in Fast Retailing Co on September 24, 2024 and sell it today you would earn a total of 8,240 from holding Fast Retailing Co or generate 34.48% 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. BW OFFSHORE LTD
Performance |
| Timeline |
| Fast Retailing |
| BW OFFSHORE LTD |
Fast Retailing and BW OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and BW OFFSHORE
The main advantage of trading using opposite Fast Retailing and BW OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, BW OFFSHORE 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 BW OFFSHORE will offset losses from the drop in BW OFFSHORE's long position.| Fast Retailing vs. VIENNA INSURANCE GR | Fast Retailing vs. Selective Insurance Group | Fast Retailing vs. Insurance Australia Group | Fast Retailing vs. Reinsurance Group of |
| BW OFFSHORE vs. Grand Canyon Education | BW OFFSHORE vs. Gamma Communications plc | BW OFFSHORE vs. CHINA EDUCATION GROUP | BW OFFSHORE vs. INTERSHOP Communications Aktiengesellschaft |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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