Correlation Between FAST RETAIL and Newmont

Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and Newmont 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 RETAIL and Newmont into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FAST RETAIL ADR and Newmont, you can compare the effects of market volatilities on FAST RETAIL and Newmont 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 RETAIL with a short position of Newmont. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and Newmont.

Diversification Opportunities for FAST RETAIL and Newmont

0.15

Correlation Coefficient

FAST RETAIL  Newmont

Average diversification

The 3 months correlation between FAST and Newmont is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont and FAST RETAIL 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 RETAIL ADR are associated (or correlated) with Newmont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and Newmont go up and down completely randomly.

Pair Corralation between FAST RETAIL and Newmont

Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 0.79 times more return on investment than Newmont. However, FAST RETAIL ADR is 1.27 times less risky than Newmont. It trades about -0.06 of its potential returns per unit of risk. Newmont is currently generating about -0.22 per unit of risk. If you would invest  3,280  in FAST RETAIL ADR on October 5, 2024 and sell it today you would lose (60.00) from holding FAST RETAIL ADR or give up 1.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

FAST RETAIL ADR  vs.  Newmont

FAST RETAIL ADR

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days FAST RETAIL ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, FAST RETAIL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Newmont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with FAST RETAIL and Newmont

The main advantage of trading using opposite FAST RETAIL and Newmont positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, Newmont 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 Newmont will offset losses from the drop in Newmont's long position.

The idea behind FAST RETAIL ADR and Newmont pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.