Correlation Between FAST RETAIL and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and Aristocrat Leisure 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 Aristocrat Leisure 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 Aristocrat Leisure Limited, you can compare the effects of market volatilities on FAST RETAIL and Aristocrat Leisure 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 Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and Aristocrat Leisure.
Diversification Opportunities for FAST RETAIL and Aristocrat Leisure
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FAST and Aristocrat is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and Aristocrat Leisure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure 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 Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between FAST RETAIL and Aristocrat Leisure
Assuming the 90 days trading horizon FAST RETAIL is expected to generate 1.23 times less return on investment than Aristocrat Leisure. In addition to that, FAST RETAIL is 1.15 times more volatile than Aristocrat Leisure Limited. It trades about 0.06 of its total potential returns per unit of risk. Aristocrat Leisure Limited is currently generating about 0.09 per unit of volatility. If you would invest 2,148 in Aristocrat Leisure Limited on November 2, 2024 and sell it today you would earn a total of 2,092 from holding Aristocrat Leisure Limited or generate 97.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. Aristocrat Leisure Limited
Performance |
| Timeline |
| FAST RETAIL ADR |
| Aristocrat Leisure |
FAST RETAIL and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and Aristocrat Leisure
The main advantage of trading using opposite FAST RETAIL and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| FAST RETAIL vs. Warner Music Group | FAST RETAIL vs. United Rentals | FAST RETAIL vs. Global Ship Lease | FAST RETAIL vs. DIVERSIFIED ROYALTY |
| Aristocrat Leisure vs. Guangdong Investment Limited | Aristocrat Leisure vs. AWILCO DRILLING PLC | Aristocrat Leisure vs. Scientific Games | Aristocrat Leisure vs. PennantPark Investment |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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