Correlation Between Fast Retailing and Aritzia
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Aritzia 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 Retailing and Aritzia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Retailing Co and Aritzia, you can compare the effects of market volatilities on Fast Retailing and Aritzia 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 Retailing with a short position of Aritzia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Aritzia.
Diversification Opportunities for Fast Retailing and Aritzia
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fast and Aritzia is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Aritzia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aritzia and Fast Retailing 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 Retailing Co are associated (or correlated) with Aritzia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aritzia has no effect on the direction of Fast Retailing i.e., Fast Retailing and Aritzia go up and down completely randomly.
Pair Corralation between Fast Retailing and Aritzia
Assuming the 90 days horizon Fast Retailing Co is expected to generate 3.37 times more return on investment than Aritzia. However, Fast Retailing is 3.37 times more volatile than Aritzia. It trades about 0.05 of its potential returns per unit of risk. Aritzia is currently generating about 0.01 per unit of risk. If you would invest 19,143 in Fast Retailing Co on August 27, 2024 and sell it today you would earn a total of 12,192 from holding Fast Retailing Co or generate 63.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 73.85% |
| Values | Daily Returns |
Fast Retailing Co vs. Aritzia
Performance |
| Timeline |
| Fast Retailing |
| Aritzia |
Fast Retailing and Aritzia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Aritzia
The main advantage of trading using opposite Fast Retailing and Aritzia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Aritzia 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 Aritzia will offset losses from the drop in Aritzia's long position.| Fast Retailing vs. Reitmans Limited | Fast Retailing vs. Reitmans Limited | Fast Retailing vs. Lulus Fashion Lounge | Fast Retailing vs. Duluth Holdings |
| Aritzia vs. Fast Retailing Co | Aritzia vs. Industria de Diseno | Aritzia vs. Shoe Carnival | Aritzia vs. Genesco |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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