Correlation Between Fast Retailing and ChampionX
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and ChampionX 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 ChampionX 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 ChampionX, you can compare the effects of market volatilities on Fast Retailing and ChampionX 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 ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and ChampionX.
Diversification Opportunities for Fast Retailing and ChampionX
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fast and ChampionX is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX 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 ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of Fast Retailing i.e., Fast Retailing and ChampionX go up and down completely randomly.
Pair Corralation between Fast Retailing and ChampionX
Assuming the 90 days horizon Fast Retailing Co is expected to generate 1.37 times more return on investment than ChampionX. However, Fast Retailing is 1.37 times more volatile than ChampionX. It trades about 0.06 of its potential returns per unit of risk. ChampionX is currently generating about 0.02 per unit of risk. If you would invest 24,400 in Fast Retailing Co on September 19, 2024 and sell it today you would earn a total of 8,860 from holding Fast Retailing Co or generate 36.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 69.64% |
| Values | Daily Returns |
Fast Retailing Co vs. ChampionX
Performance |
| Timeline |
| Fast Retailing |
| ChampionX |
Fast Retailing and ChampionX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and ChampionX
The main advantage of trading using opposite Fast Retailing and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, ChampionX 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 ChampionX will offset losses from the drop in ChampionX's long position.| Fast Retailing vs. Industria de Diseno | Fast Retailing vs. Aritzia | Fast Retailing vs. Shoe Carnival | Fast Retailing vs. Genesco |
| ChampionX vs. Expro Group Holdings | ChampionX vs. Ranger Energy Services | ChampionX vs. Cactus Inc | ChampionX vs. MRC Global |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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