Correlation Between Ross Stores and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Ross Stores and Fast Retailing 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 Ross Stores and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Fast Retailing Co, you can compare the effects of market volatilities on Ross Stores and Fast Retailing 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 Ross Stores with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Fast Retailing.
Diversification Opportunities for Ross Stores and Fast Retailing
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ross and Fast is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and Ross Stores 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 Ross Stores are associated (or correlated) with Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of Ross Stores i.e., Ross Stores and Fast Retailing go up and down completely randomly.
Pair Corralation between Ross Stores and Fast Retailing
Given the investment horizon of 90 days Ross Stores is expected to generate 2.44 times less return on investment than Fast Retailing. But when comparing it to its historical volatility, Ross Stores is 1.96 times less risky than Fast Retailing. It trades about 0.04 of its potential returns per unit of risk. Fast Retailing Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 25,619 in Fast Retailing Co on August 27, 2024 and sell it today you would earn a total of 5,716 from holding Fast Retailing Co or generate 22.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 83.06% |
| Values | Daily Returns |
Ross Stores vs. Fast Retailing Co
Performance |
| Timeline |
| Ross Stores |
| Fast Retailing |
Ross Stores and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Fast Retailing
The main advantage of trading using opposite Ross Stores and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
| Fast Retailing vs. Reitmans Limited | Fast Retailing vs. Reitmans Limited | Fast Retailing vs. Lulus Fashion Lounge | Fast Retailing vs. Duluth Holdings |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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