Correlation Between FAST RETAIL and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and PennantPark Investment 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 RETAIL and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAST RETAIL ADR and PennantPark Investment, you can compare the effects of market volatilities on FAST RETAIL and PennantPark Investment 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 RETAIL with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and PennantPark Investment.
Diversification Opportunities for FAST RETAIL and PennantPark Investment
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FAST and PennantPark is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and FAST RETAIL 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 RETAIL ADR are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and PennantPark Investment go up and down completely randomly.
Pair Corralation between FAST RETAIL and PennantPark Investment
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 0.88 times more return on investment than PennantPark Investment. However, FAST RETAIL ADR is 1.14 times less risky than PennantPark Investment. It trades about 0.01 of its potential returns per unit of risk. PennantPark Investment is currently generating about -0.02 per unit of risk. If you would invest 3,120 in FAST RETAIL ADR on November 6, 2024 and sell it today you would earn a total of 0.00 from holding FAST RETAIL ADR or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. PennantPark Investment
Performance |
| Timeline |
| FAST RETAIL ADR |
| PennantPark Investment |
FAST RETAIL and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and PennantPark Investment
The main advantage of trading using opposite FAST RETAIL and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.| FAST RETAIL vs. Fortescue Metals Group | FAST RETAIL vs. Nippon Light Metal | FAST RETAIL vs. FIREWEED METALS P | FAST RETAIL vs. HK Electric Investments |
| PennantPark Investment vs. Ribbon Communications | PennantPark Investment vs. ecotel communication ag | PennantPark Investment vs. Casio Computer CoLtd | PennantPark Investment vs. Tokyu Construction Co |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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