Correlation Between FAST RETAIL and ITOCHU
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and ITOCHU 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 ITOCHU 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 ITOCHU, you can compare the effects of market volatilities on FAST RETAIL and ITOCHU 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 ITOCHU. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and ITOCHU.
Diversification Opportunities for FAST RETAIL and ITOCHU
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FAST and ITOCHU is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and ITOCHU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITOCHU 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 ITOCHU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITOCHU has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and ITOCHU go up and down completely randomly.
Pair Corralation between FAST RETAIL and ITOCHU
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 1.39 times more return on investment than ITOCHU. However, FAST RETAIL is 1.39 times more volatile than ITOCHU. It trades about -0.16 of its potential returns per unit of risk. ITOCHU is currently generating about -0.23 per unit of risk. If you would invest 3,280 in FAST RETAIL ADR on November 2, 2024 and sell it today you would lose (220.00) from holding FAST RETAIL ADR or give up 6.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
FAST RETAIL ADR vs. ITOCHU
Performance |
| Timeline |
| FAST RETAIL ADR |
| ITOCHU |
FAST RETAIL and ITOCHU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and ITOCHU
The main advantage of trading using opposite FAST RETAIL and ITOCHU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, ITOCHU 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 ITOCHU will offset losses from the drop in ITOCHU's long position.| FAST RETAIL vs. CompuGroup Medical SE | FAST RETAIL vs. MeVis Medical Solutions | FAST RETAIL vs. Siamgas And Petrochemicals | FAST RETAIL vs. SOCKET MOBILE NEW |
| ITOCHU vs. Japan Medical Dynamic | ITOCHU vs. De Grey Mining | ITOCHU vs. Jacquet Metal Service | ITOCHU vs. Genertec Universal Medical |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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