Correlation Between Fast Retailing and Hawkins
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Hawkins 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 Hawkins 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 Hawkins, you can compare the effects of market volatilities on Fast Retailing and Hawkins 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 Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Hawkins.
Diversification Opportunities for Fast Retailing and Hawkins
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fast and Hawkins is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Fast Retailing i.e., Fast Retailing and Hawkins go up and down completely randomly.
Pair Corralation between Fast Retailing and Hawkins
Assuming the 90 days horizon Fast Retailing Co is expected to under-perform the Hawkins. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fast Retailing Co is 2.67 times less risky than Hawkins. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Hawkins is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 11,699 in Hawkins on August 30, 2024 and sell it today you would earn a total of 1,640 from holding Hawkins or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fast Retailing Co vs. Hawkins
Performance |
| Timeline |
| Fast Retailing |
| Hawkins |
Fast Retailing and Hawkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Hawkins
The main advantage of trading using opposite Fast Retailing and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.| Fast Retailing vs. Shoe Carnival | Fast Retailing vs. Genesco | Fast Retailing vs. Ross Stores | Fast Retailing vs. Burlington Stores |
| Hawkins vs. Perimeter Solutions SA | Hawkins vs. Kronos Worldwide | Hawkins vs. Sensient Technologies | Hawkins vs. Element Solutions |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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