Correlation Between Fast Retailing and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and BW Offshore 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 BW Offshore 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 BW Offshore Limited, you can compare the effects of market volatilities on Fast Retailing and BW Offshore 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 BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and BW Offshore.
Diversification Opportunities for Fast Retailing and BW Offshore
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fast and BWOFY is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and BW Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore Limited 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 BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore Limited has no effect on the direction of Fast Retailing i.e., Fast Retailing and BW Offshore go up and down completely randomly.
Pair Corralation between Fast Retailing and BW Offshore
Assuming the 90 days horizon Fast Retailing Co is expected to generate 1.98 times more return on investment than BW Offshore. However, Fast Retailing is 1.98 times more volatile than BW Offshore Limited. It trades about 0.07 of its potential returns per unit of risk. BW Offshore Limited is currently generating about 0.07 per unit of risk. If you would invest 23,901 in Fast Retailing Co on September 12, 2024 and sell it today you would earn a total of 9,689 from holding Fast Retailing Co or generate 40.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.38% |
| Values | Daily Returns |
Fast Retailing Co vs. BW Offshore Limited
Performance |
| Timeline |
| Fast Retailing |
| BW Offshore Limited |
Fast Retailing and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and BW Offshore
The main advantage of trading using opposite Fast Retailing and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, BW Offshore 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| Fast Retailing vs. Industria de Diseno | Fast Retailing vs. Aritzia | Fast Retailing vs. Shoe Carnival | Fast Retailing vs. Genesco |
| BW Offshore vs. Legacy Education | BW Offshore vs. Apple Inc | BW Offshore vs. NVIDIA | BW Offshore vs. Microsoft |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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