Correlation Between Fast Retailing and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Grocery Outlet 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 Grocery Outlet 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 Grocery Outlet Holding, you can compare the effects of market volatilities on Fast Retailing and Grocery Outlet 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 Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Grocery Outlet.
Diversification Opportunities for Fast Retailing and Grocery Outlet
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fast and Grocery is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding 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 Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Fast Retailing i.e., Fast Retailing and Grocery Outlet go up and down completely randomly.
Pair Corralation between Fast Retailing and Grocery Outlet
Assuming the 90 days horizon Fast Retailing Co is expected to generate 4.86 times more return on investment than Grocery Outlet. However, Fast Retailing is 4.86 times more volatile than Grocery Outlet Holding. It trades about 0.05 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about -0.03 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. Grocery Outlet Holding
Performance |
| Timeline |
| Fast Retailing |
| Grocery Outlet Holding |
Fast Retailing and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Grocery Outlet
The main advantage of trading using opposite Fast Retailing and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Grocery Outlet 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 Grocery Outlet will offset losses from the drop in Grocery Outlet's long position.| Fast Retailing vs. Reitmans Limited | Fast Retailing vs. Reitmans Limited | Fast Retailing vs. Lulus Fashion Lounge | Fast Retailing vs. Duluth Holdings |
| Grocery Outlet vs. Innovative Food Hldg | Grocery Outlet vs. Calavo Growers | Grocery Outlet vs. The Chefs Warehouse | Grocery Outlet vs. AMCON Distributing |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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