Correlation Between FAST RETAIL and Consolidated Communications
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and Consolidated Communications 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 Consolidated Communications 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 Consolidated Communications Holdings, you can compare the effects of market volatilities on FAST RETAIL and Consolidated Communications 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 Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and Consolidated Communications.
Diversification Opportunities for FAST RETAIL and Consolidated Communications
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FAST and Consolidated is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and Consolidated Communications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications 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 Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and Consolidated Communications go up and down completely randomly.
Pair Corralation between FAST RETAIL and Consolidated Communications
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to under-perform the Consolidated Communications. In addition to that, FAST RETAIL is 2.66 times more volatile than Consolidated Communications Holdings. It trades about -0.07 of its total potential returns per unit of risk. Consolidated Communications Holdings is currently generating about 0.15 per unit of volatility. If you would invest 422.00 in Consolidated Communications Holdings on October 15, 2024 and sell it today you would earn a total of 26.00 from holding Consolidated Communications Holdings or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 88.33% |
| Values | Daily Returns |
FAST RETAIL ADR vs. Consolidated Communications Ho
Performance |
| Timeline |
| FAST RETAIL ADR |
| Consolidated Communications |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
FAST RETAIL and Consolidated Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and Consolidated Communications
The main advantage of trading using opposite FAST RETAIL and Consolidated Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, Consolidated Communications 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 Consolidated Communications will offset losses from the drop in Consolidated Communications' long position.| FAST RETAIL vs. Fevertree Drinks PLC | FAST RETAIL vs. United Breweries Co | FAST RETAIL vs. NEW MILLENNIUM IRON | FAST RETAIL vs. Molson Coors Beverage |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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