Correlation Between FAST RETAIL and Consolidated Edison
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and Consolidated Edison 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 Edison 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 Edison, you can compare the effects of market volatilities on FAST RETAIL and Consolidated Edison 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 Edison. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and Consolidated Edison.
Diversification Opportunities for FAST RETAIL and Consolidated Edison
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FAST and Consolidated is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and Consolidated Edison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Edison 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 Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Edison has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and Consolidated Edison go up and down completely randomly.
Pair Corralation between FAST RETAIL and Consolidated Edison
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to under-perform the Consolidated Edison. In addition to that, FAST RETAIL is 1.12 times more volatile than Consolidated Edison. It trades about -0.14 of its total potential returns per unit of risk. Consolidated Edison is currently generating about 0.08 per unit of volatility. If you would invest 8,648 in Consolidated Edison on November 4, 2024 and sell it today you would earn a total of 232.00 from holding Consolidated Edison or generate 2.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. Consolidated Edison
Performance |
| Timeline |
| FAST RETAIL ADR |
| Consolidated Edison |
FAST RETAIL and Consolidated Edison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and Consolidated Edison
The main advantage of trading using opposite FAST RETAIL and Consolidated Edison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, Consolidated Edison 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 Edison will offset losses from the drop in Consolidated Edison's long position.| FAST RETAIL vs. MOVIE GAMES SA | FAST RETAIL vs. Hanison Construction Holdings | FAST RETAIL vs. Granite Construction | FAST RETAIL vs. Australian Agricultural |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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