Correlation Between Fast Retailing and Reitmans (Canada)
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Reitmans (Canada) 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 Reitmans (Canada) 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 Reitmans Limited, you can compare the effects of market volatilities on Fast Retailing and Reitmans (Canada) 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 Reitmans (Canada). Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Reitmans (Canada).
Diversification Opportunities for Fast Retailing and Reitmans (Canada)
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fast and Reitmans is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Reitmans Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitmans (Canada) 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 Reitmans (Canada). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitmans (Canada) has no effect on the direction of Fast Retailing i.e., Fast Retailing and Reitmans (Canada) go up and down completely randomly.
Pair Corralation between Fast Retailing and Reitmans (Canada)
Assuming the 90 days horizon Fast Retailing Co is expected to under-perform the Reitmans (Canada). In addition to that, Fast Retailing is 3.5 times more volatile than Reitmans Limited. It trades about -0.22 of its total potential returns per unit of risk. Reitmans Limited is currently generating about 0.22 per unit of volatility. If you would invest 197.00 in Reitmans Limited on August 27, 2024 and sell it today you would earn a total of 3.00 from holding Reitmans Limited or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. Reitmans Limited
Performance |
| Timeline |
| Fast Retailing |
| Reitmans (Canada) |
Fast Retailing and Reitmans (Canada) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Reitmans (Canada)
The main advantage of trading using opposite Fast Retailing and Reitmans (Canada) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Reitmans (Canada) 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 Reitmans (Canada) will offset losses from the drop in Reitmans (Canada)'s long position.| Fast Retailing vs. Reitmans Limited | Fast Retailing vs. Reitmans Limited | Fast Retailing vs. Lulus Fashion Lounge | Fast Retailing vs. Duluth Holdings |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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