Correlation Between FAST RETAIL and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and CNH Industrial 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 CNH Industrial 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 CNH Industrial NV, you can compare the effects of market volatilities on FAST RETAIL and CNH Industrial 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 CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and CNH Industrial.
Diversification Opportunities for FAST RETAIL and CNH Industrial
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FAST and CNH is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV 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 CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and CNH Industrial go up and down completely randomly.
Pair Corralation between FAST RETAIL and CNH Industrial
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to under-perform the CNH Industrial. In addition to that, FAST RETAIL is 1.07 times more volatile than CNH Industrial NV. It trades about -0.24 of its total potential returns per unit of risk. CNH Industrial NV is currently generating about 0.34 per unit of volatility. If you would invest 1,076 in CNH Industrial NV on October 25, 2024 and sell it today you would earn a total of 134.00 from holding CNH Industrial NV or generate 12.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
FAST RETAIL ADR vs. CNH Industrial NV
Performance |
| Timeline |
| FAST RETAIL ADR |
| CNH Industrial NV |
FAST RETAIL and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and CNH Industrial
The main advantage of trading using opposite FAST RETAIL and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| FAST RETAIL vs. BANKINTER ADR 2007 | FAST RETAIL vs. AUSNUTRIA DAIRY | FAST RETAIL vs. SUN LIFE FINANCIAL | FAST RETAIL vs. Chiba Bank |
| CNH Industrial vs. Jacquet Metal Service | CNH Industrial vs. FIREWEED METALS P | CNH Industrial vs. PLAYMATES TOYS | CNH Industrial vs. DAIDO METAL TD |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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