Correlation Between Fast Retailing and Simon Property
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Simon Property 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 Simon Property 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 Simon Property Group, you can compare the effects of market volatilities on Fast Retailing and Simon Property 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 Simon Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Simon Property.
Diversification Opportunities for Fast Retailing and Simon Property
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fast and Simon is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Simon Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simon Property Group 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 Simon Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simon Property Group has no effect on the direction of Fast Retailing i.e., Fast Retailing and Simon Property go up and down completely randomly.
Pair Corralation between Fast Retailing and Simon Property
Assuming the 90 days horizon Fast Retailing Co is expected to generate 1.84 times more return on investment than Simon Property. However, Fast Retailing is 1.84 times more volatile than Simon Property Group. It trades about 0.07 of its potential returns per unit of risk. Simon Property Group is currently generating about 0.11 per unit of risk. If you would invest 24,795 in Fast Retailing Co on September 4, 2024 and sell it today you would earn a total of 8,795 from holding Fast Retailing Co or generate 35.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 84.62% |
| Values | Daily Returns |
Fast Retailing Co vs. Simon Property Group
Performance |
| Timeline |
| Fast Retailing |
| Simon Property Group |
Fast Retailing and Simon Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Simon Property
The main advantage of trading using opposite Fast Retailing and Simon Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Simon Property 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 Simon Property will offset losses from the drop in Simon Property's long position.| Fast Retailing vs. Industria de Diseno | Fast Retailing vs. Aritzia | Fast Retailing vs. Shoe Carnival | Fast Retailing vs. Genesco |
| Simon Property vs. Federal Realty Investment | Simon Property vs. Agree Realty | Simon Property vs. National Retail Properties | Simon Property vs. Kimco Realty |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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