Correlation Between Fast Retailing and Foremost Lithium
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Foremost Lithium 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 Foremost Lithium 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 Foremost Lithium Resource, you can compare the effects of market volatilities on Fast Retailing and Foremost Lithium 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 Foremost Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Foremost Lithium.
Diversification Opportunities for Fast Retailing and Foremost Lithium
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fast and Foremost is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Foremost Lithium Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foremost Lithium Resource 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 Foremost Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foremost Lithium Resource has no effect on the direction of Fast Retailing i.e., Fast Retailing and Foremost Lithium go up and down completely randomly.
Pair Corralation between Fast Retailing and Foremost Lithium
Assuming the 90 days horizon Fast Retailing Co is expected to generate 0.22 times more return on investment than Foremost Lithium. However, Fast Retailing Co is 4.55 times less risky than Foremost Lithium. It trades about -0.21 of its potential returns per unit of risk. Foremost Lithium Resource is currently generating about -0.36 per unit of risk. If you would invest 33,050 in Fast Retailing Co on August 26, 2024 and sell it today you would lose (1,715) from holding Fast Retailing Co or give up 5.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. Foremost Lithium Resource
Performance |
| Timeline |
| Fast Retailing |
| Foremost Lithium Resource |
Fast Retailing and Foremost Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Foremost Lithium
The main advantage of trading using opposite Fast Retailing and Foremost Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Foremost Lithium 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 Foremost Lithium will offset losses from the drop in Foremost Lithium's long position.| Fast Retailing vs. Reitmans Limited | Fast Retailing vs. Reitmans Limited | Fast Retailing vs. Lulus Fashion Lounge | Fast Retailing vs. Duluth Holdings |
| Foremost Lithium vs. Fast Retailing Co | Foremost Lithium vs. SunLink Health Systems | Foremost Lithium vs. Grocery Outlet Holding | Foremost Lithium vs. Zijin Mining Group |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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