Correlation Between Fast Retailing and Industria
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Industria 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 Industria 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 Industria de Diseo, you can compare the effects of market volatilities on Fast Retailing and Industria 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 Industria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Industria.
Diversification Opportunities for Fast Retailing and Industria
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fast and Industria is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Industria de Diseo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industria de Diseo 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 Industria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industria de Diseo has no effect on the direction of Fast Retailing i.e., Fast Retailing and Industria go up and down completely randomly.
Pair Corralation between Fast Retailing and Industria
Assuming the 90 days horizon Fast Retailing Co is expected to generate 0.71 times more return on investment than Industria. However, Fast Retailing Co is 1.41 times less risky than Industria. It trades about 0.11 of its potential returns per unit of risk. Industria de Diseo is currently generating about 0.06 per unit of risk. If you would invest 2,647 in Fast Retailing Co on November 3, 2024 and sell it today you would earn a total of 663.00 from holding Fast Retailing Co or generate 25.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. Industria de Diseo
Performance |
| Timeline |
| Fast Retailing |
| Industria de Diseo |
Fast Retailing and Industria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Industria
The main advantage of trading using opposite Fast Retailing and Industria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Industria 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 Industria will offset losses from the drop in Industria's long position.| Fast Retailing vs. The TJX Companies | Fast Retailing vs. Lululemon Athletica | Fast Retailing vs. Industria de Diseo | Fast Retailing vs. Ross Stores |
| Industria vs. Fast Retailing Co | Industria vs. The TJX Companies | Industria vs. Ross Stores | Industria vs. Urban Outfitters |
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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