Correlation Between CARSALESCOM and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both CARSALESCOM 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 CARSALESCOM and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and Fast Retailing Co, you can compare the effects of market volatilities on CARSALESCOM 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 CARSALESCOM with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALESCOM and Fast Retailing.
Diversification Opportunities for CARSALESCOM and Fast Retailing
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between CARSALESCOM and Fast is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM i.e., CARSALESCOM and Fast Retailing go up and down completely randomly.
Pair Corralation between CARSALESCOM and Fast Retailing
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.83 times more return on investment than Fast Retailing. However, CARSALESCOM is 1.2 times less risky than Fast Retailing. It trades about 0.28 of its potential returns per unit of risk. Fast Retailing Co is currently generating about -0.15 per unit of risk. If you would invest 2,180 in CARSALESCOM on November 2, 2024 and sell it today you would earn a total of 220.00 from holding CARSALESCOM or generate 10.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. Fast Retailing Co
Performance |
| Timeline |
| CARSALESCOM |
| Fast Retailing |
CARSALESCOM and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALESCOM and Fast Retailing
The main advantage of trading using opposite CARSALESCOM and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALESCOM 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.| CARSALESCOM vs. PENN NATL GAMING | CARSALESCOM vs. CSSC Offshore Marine | CARSALESCOM vs. SIERRA METALS | CARSALESCOM vs. Yuexiu Transport Infrastructure |
| Fast Retailing vs. Singapore Airlines Limited | Fast Retailing vs. GMO Internet | Fast Retailing vs. Fortescue Metals Group | Fast Retailing vs. Spirent Communications plc |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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