Correlation Between Fast Retailing and Valneva SE
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Valneva SE 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 Valneva SE 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 Valneva SE ADR, you can compare the effects of market volatilities on Fast Retailing and Valneva SE 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 Valneva SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Valneva SE.
Diversification Opportunities for Fast Retailing and Valneva SE
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fast and Valneva is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of Fast Retailing i.e., Fast Retailing and Valneva SE go up and down completely randomly.
Pair Corralation between Fast Retailing and Valneva SE
Assuming the 90 days horizon Fast Retailing Co is expected to generate 0.42 times more return on investment than Valneva SE. However, Fast Retailing Co is 2.39 times less risky than Valneva SE. It trades about -0.11 of its potential returns per unit of risk. Valneva SE ADR is currently generating about -0.62 per unit of risk. If you would invest 33,100 in Fast Retailing Co on August 30, 2024 and sell it today you would lose (1,035) from holding Fast Retailing Co or give up 3.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. Valneva SE ADR
Performance |
| Timeline |
| Fast Retailing |
| Valneva SE ADR |
Fast Retailing and Valneva SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Valneva SE
The main advantage of trading using opposite Fast Retailing and Valneva SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Valneva SE 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 Valneva SE will offset losses from the drop in Valneva SE's long position.| Fast Retailing vs. Shoe Carnival | Fast Retailing vs. Genesco | Fast Retailing vs. Ross Stores | Fast Retailing vs. Burlington Stores |
| Valneva SE vs. Bright Minds Biosciences | Valneva SE vs. HP Inc | Valneva SE vs. Intel | Valneva SE vs. Chevron Corp |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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