Correlation Between Fast Retailing and Thor Industries
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Thor Industries 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 Thor Industries 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 Thor Industries, you can compare the effects of market volatilities on Fast Retailing and Thor Industries 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 Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Thor Industries.
Diversification Opportunities for Fast Retailing and Thor Industries
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fast and Thor is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries 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 Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of Fast Retailing i.e., Fast Retailing and Thor Industries go up and down completely randomly.
Pair Corralation between Fast Retailing and Thor Industries
Assuming the 90 days horizon Fast Retailing Co is expected to generate 0.99 times more return on investment than Thor Industries. However, Fast Retailing Co is 1.01 times less risky than Thor Industries. It trades about 0.03 of its potential returns per unit of risk. Thor Industries is currently generating about -0.02 per unit of risk. If you would invest 28,755 in Fast Retailing Co on August 27, 2024 and sell it today you would earn a total of 2,580 from holding Fast Retailing Co or generate 8.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. Thor Industries
Performance |
| Timeline |
| Fast Retailing |
| Thor Industries |
Fast Retailing and Thor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Thor Industries
The main advantage of trading using opposite Fast Retailing and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Thor Industries 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 Thor Industries will offset losses from the drop in Thor Industries' long position.| Fast Retailing vs. Reitmans Limited | Fast Retailing vs. Reitmans Limited | Fast Retailing vs. Lulus Fashion Lounge | Fast Retailing vs. Duluth Holdings |
| Thor Industries vs. Nio Class A | Thor Industries vs. Rivian Automotive | Thor Industries vs. Lucid Group | Thor Industries vs. Tesla Inc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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