Correlation Between Fast Retailing and CREF Inflation
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and CREF Inflation 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 CREF Inflation 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 CREF Inflation Linked Bond, you can compare the effects of market volatilities on Fast Retailing and CREF Inflation 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 CREF Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and CREF Inflation.
Diversification Opportunities for Fast Retailing and CREF Inflation
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fast and CREF is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and CREF Inflation Linked Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREF Inflation Linked 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 CREF Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREF Inflation Linked has no effect on the direction of Fast Retailing i.e., Fast Retailing and CREF Inflation go up and down completely randomly.
Pair Corralation between Fast Retailing and CREF Inflation
Assuming the 90 days horizon Fast Retailing Co is expected to generate 11.7 times more return on investment than CREF Inflation. However, Fast Retailing is 11.7 times more volatile than CREF Inflation Linked Bond. It trades about 0.05 of its potential returns per unit of risk. CREF Inflation Linked Bond is currently generating about 0.31 per unit of risk. If you would invest 33,100 in Fast Retailing Co on September 13, 2024 and sell it today you would earn a total of 490.00 from holding Fast Retailing Co or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. CREF Inflation Linked Bond
Performance |
| Timeline |
| Fast Retailing |
| CREF Inflation Linked |
Fast Retailing and CREF Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and CREF Inflation
The main advantage of trading using opposite Fast Retailing and CREF Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, CREF Inflation 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 CREF Inflation will offset losses from the drop in CREF Inflation's long position.| Fast Retailing vs. Aritzia | Fast Retailing vs. Boot Barn Holdings | Fast Retailing vs. Guess Inc | Fast Retailing vs. The TJX Companies |
| CREF Inflation vs. Lululemon Athletica | CREF Inflation vs. Sea | CREF Inflation vs. RCS MediaGroup SpA | CREF Inflation vs. Fast Retailing Co |
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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