Correlation Between FAST RETAIL and BOSTON BEER
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and BOSTON BEER 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 BOSTON BEER 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 BOSTON BEER A , you can compare the effects of market volatilities on FAST RETAIL and BOSTON BEER 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 BOSTON BEER. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and BOSTON BEER.
Diversification Opportunities for FAST RETAIL and BOSTON BEER
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FAST and BOSTON is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and BOSTON BEER A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOSTON BEER A 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 BOSTON BEER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOSTON BEER A has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and BOSTON BEER go up and down completely randomly.
Pair Corralation between FAST RETAIL and BOSTON BEER
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 1.3 times more return on investment than BOSTON BEER. However, FAST RETAIL is 1.3 times more volatile than BOSTON BEER A . It trades about -0.04 of its potential returns per unit of risk. BOSTON BEER A is currently generating about -0.23 per unit of risk. If you would invest 3,340 in FAST RETAIL ADR on October 10, 2024 and sell it today you would lose (60.00) from holding FAST RETAIL ADR or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. BOSTON BEER A
Performance |
| Timeline |
| FAST RETAIL ADR |
| BOSTON BEER A |
FAST RETAIL and BOSTON BEER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and BOSTON BEER
The main advantage of trading using opposite FAST RETAIL and BOSTON BEER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, BOSTON BEER 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 BOSTON BEER will offset losses from the drop in BOSTON BEER's long position.| FAST RETAIL vs. Superior Plus Corp | FAST RETAIL vs. NMI Holdings | FAST RETAIL vs. SIVERS SEMICONDUCTORS AB | FAST RETAIL vs. Talanx AG |
| BOSTON BEER vs. INDOFOOD AGRI RES | BOSTON BEER vs. Automatic Data Processing | BOSTON BEER vs. Linedata Services SA | BOSTON BEER vs. INFORMATION SVC GRP |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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