Correlation Between FAST RETAIL and G III
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and G III 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 G III 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 G III Apparel Group, you can compare the effects of market volatilities on FAST RETAIL and G III 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 G III. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and G III.
Diversification Opportunities for FAST RETAIL and G III
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FAST and GI4 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and G III go up and down completely randomly.
Pair Corralation between FAST RETAIL and G III
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to under-perform the G III. In addition to that, FAST RETAIL is 1.32 times more volatile than G III Apparel Group. It trades about -0.18 of its total potential returns per unit of risk. G III Apparel Group is currently generating about -0.14 per unit of volatility. If you would invest 3,160 in G III Apparel Group on October 28, 2024 and sell it today you would lose (140.00) from holding G III Apparel Group or give up 4.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. G III Apparel Group
Performance |
| Timeline |
| FAST RETAIL ADR |
| G III Apparel |
FAST RETAIL and G III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and G III
The main advantage of trading using opposite FAST RETAIL and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, G III 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 G III will offset losses from the drop in G III's long position.The idea behind FAST RETAIL ADR and G III Apparel Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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