Correlation Between FAST RETAIL and Pernod Ricard
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and Pernod Ricard 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 Pernod Ricard 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 Pernod Ricard SA, you can compare the effects of market volatilities on FAST RETAIL and Pernod Ricard 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 Pernod Ricard. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and Pernod Ricard.
Diversification Opportunities for FAST RETAIL and Pernod Ricard
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FAST and Pernod is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and Pernod Ricard SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pernod Ricard SA 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 Pernod Ricard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pernod Ricard SA has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and Pernod Ricard go up and down completely randomly.
Pair Corralation between FAST RETAIL and Pernod Ricard
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to under-perform the Pernod Ricard. In addition to that, FAST RETAIL is 1.21 times more volatile than Pernod Ricard SA. It trades about -0.05 of its total potential returns per unit of risk. Pernod Ricard SA is currently generating about -0.01 per unit of volatility. If you would invest 10,650 in Pernod Ricard SA on October 26, 2024 and sell it today you would lose (95.00) from holding Pernod Ricard SA or give up 0.89% 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. Pernod Ricard SA
Performance |
| Timeline |
| FAST RETAIL ADR |
| Pernod Ricard SA |
FAST RETAIL and Pernod Ricard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and Pernod Ricard
The main advantage of trading using opposite FAST RETAIL and Pernod Ricard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, Pernod Ricard 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 Pernod Ricard will offset losses from the drop in Pernod Ricard's long position.| FAST RETAIL vs. SIERRA METALS | FAST RETAIL vs. Zijin Mining Group | FAST RETAIL vs. Kaiser Aluminum | FAST RETAIL vs. ARDAGH METAL PACDL 0001 |
| Pernod Ricard vs. COSTCO WHOLESALE CDR | Pernod Ricard vs. Vienna Insurance Group | Pernod Ricard vs. FAST RETAIL ADR | Pernod Ricard vs. Zurich Insurance Group |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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