Correlation Between FAST RETAIL and ELEMENT FLEET
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and ELEMENT FLEET 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 ELEMENT FLEET 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 ELEMENT FLEET MGMT, you can compare the effects of market volatilities on FAST RETAIL and ELEMENT FLEET 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 ELEMENT FLEET. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and ELEMENT FLEET.
Diversification Opportunities for FAST RETAIL and ELEMENT FLEET
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FAST and ELEMENT is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and ELEMENT FLEET MGMT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELEMENT FLEET MGMT 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 ELEMENT FLEET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELEMENT FLEET MGMT has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and ELEMENT FLEET go up and down completely randomly.
Pair Corralation between FAST RETAIL and ELEMENT FLEET
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 0.99 times more return on investment than ELEMENT FLEET. However, FAST RETAIL ADR is 1.01 times less risky than ELEMENT FLEET. It trades about 0.07 of its potential returns per unit of risk. ELEMENT FLEET MGMT is currently generating about 0.06 per unit of risk. If you would invest 2,168 in FAST RETAIL ADR on September 12, 2024 and sell it today you would earn a total of 1,172 from holding FAST RETAIL ADR or generate 54.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. ELEMENT FLEET MGMT
Performance |
| Timeline |
| FAST RETAIL ADR |
| ELEMENT FLEET MGMT |
FAST RETAIL and ELEMENT FLEET Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and ELEMENT FLEET
The main advantage of trading using opposite FAST RETAIL and ELEMENT FLEET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, ELEMENT FLEET 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 ELEMENT FLEET will offset losses from the drop in ELEMENT FLEET's long position.| FAST RETAIL vs. CCC SA | FAST RETAIL vs. AOYAMA TRADING | FAST RETAIL vs. Superior Plus Corp | FAST RETAIL vs. SIVERS SEMICONDUCTORS AB |
| ELEMENT FLEET vs. Tyson Foods | ELEMENT FLEET vs. National Beverage Corp | ELEMENT FLEET vs. Infrastrutture Wireless Italiane | ELEMENT FLEET vs. Tower One Wireless |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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