Correlation Between FAST RETAIL and Scientific Games
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and Scientific Games 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 Scientific Games 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 Scientific Games, you can compare the effects of market volatilities on FAST RETAIL and Scientific Games 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 Scientific Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and Scientific Games.
Diversification Opportunities for FAST RETAIL and Scientific Games
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between FAST and Scientific is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and Scientific Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Games 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 Scientific Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Games has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and Scientific Games go up and down completely randomly.
Pair Corralation between FAST RETAIL and Scientific Games
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 1.12 times more return on investment than Scientific Games. However, FAST RETAIL is 1.12 times more volatile than Scientific Games. It trades about -0.05 of its potential returns per unit of risk. Scientific Games is currently generating about -0.17 per unit of risk. If you would invest 3,160 in FAST RETAIL ADR on October 30, 2024 and sell it today you would lose (140.00) from holding FAST RETAIL ADR or give up 4.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. Scientific Games
Performance |
| Timeline |
| FAST RETAIL ADR |
| Scientific Games |
FAST RETAIL and Scientific Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and Scientific Games
The main advantage of trading using opposite FAST RETAIL and Scientific Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, Scientific Games 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 Scientific Games will offset losses from the drop in Scientific Games' long position.The idea behind FAST RETAIL ADR and Scientific Games 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.| Scientific Games vs. Acadia Healthcare | Scientific Games vs. PURETECH HEALTH PLC | Scientific Games vs. CARDINAL HEALTH | Scientific Games vs. Sunstone Hotel Investors |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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