Correlation Between Fast Retailing and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Olympic Steel 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 Olympic Steel 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 Olympic Steel, you can compare the effects of market volatilities on Fast Retailing and Olympic Steel 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 Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Olympic Steel.
Diversification Opportunities for Fast Retailing and Olympic Steel
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fast and Olympic is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel 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 Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of Fast Retailing i.e., Fast Retailing and Olympic Steel go up and down completely randomly.
Pair Corralation between Fast Retailing and Olympic Steel
Assuming the 90 days horizon Fast Retailing Co is expected to generate 0.65 times more return on investment than Olympic Steel. However, Fast Retailing Co is 1.53 times less risky than Olympic Steel. It trades about 0.05 of its potential returns per unit of risk. Olympic Steel is currently generating about 0.0 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 Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fast Retailing Co vs. Olympic Steel
Performance |
| Timeline |
| Fast Retailing |
| Olympic Steel |
Fast Retailing and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Olympic Steel
The main advantage of trading using opposite Fast Retailing and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Olympic Steel 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 Olympic Steel will offset losses from the drop in Olympic Steel's long position.| Fast Retailing vs. Aritzia | Fast Retailing vs. Boot Barn Holdings | Fast Retailing vs. Guess Inc | Fast Retailing vs. The TJX Companies |
| Olympic Steel vs. Fortitude Gold Corp | Olympic Steel vs. New Gold | Olympic Steel vs. Galiano Gold | Olympic Steel vs. GoldMining |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |