Correlation Between FAST RETAIL and AerCap Holdings
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and AerCap Holdings 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 AerCap Holdings 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 AerCap Holdings NV, you can compare the effects of market volatilities on FAST RETAIL and AerCap Holdings 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 AerCap Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and AerCap Holdings.
Diversification Opportunities for FAST RETAIL and AerCap Holdings
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FAST and AerCap is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and AerCap Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AerCap Holdings NV 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 AerCap Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AerCap Holdings NV has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and AerCap Holdings go up and down completely randomly.
Pair Corralation between FAST RETAIL and AerCap Holdings
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 1.25 times more return on investment than AerCap Holdings. However, FAST RETAIL is 1.25 times more volatile than AerCap Holdings NV. It trades about 0.22 of its potential returns per unit of risk. AerCap Holdings NV is currently generating about 0.26 per unit of risk. If you would invest 2,920 in FAST RETAIL ADR on September 4, 2024 and sell it today you would earn a total of 240.00 from holding FAST RETAIL ADR or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
FAST RETAIL ADR vs. AerCap Holdings NV
Performance |
| Timeline |
| FAST RETAIL ADR |
| AerCap Holdings NV |
FAST RETAIL and AerCap Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and AerCap Holdings
The main advantage of trading using opposite FAST RETAIL and AerCap Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, AerCap Holdings 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 AerCap Holdings will offset losses from the drop in AerCap Holdings' long position.| FAST RETAIL vs. FAST RETAILCOSPHDR 1 | FAST RETAIL vs. Ross Stores | FAST RETAIL vs. Genesco | FAST RETAIL vs. Stitch Fix |
| AerCap Holdings vs. Airports of Thailand | AerCap Holdings vs. Airports of Thailand | AerCap Holdings vs. Aena SME SA | AerCap Holdings vs. AENA SME UNSPADR110 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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