Correlation Between FAST RETAIL and NVIDIA

Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and NVIDIA 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 NVIDIA 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 NVIDIA, you can compare the effects of market volatilities on FAST RETAIL and NVIDIA 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 NVIDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and NVIDIA.

Diversification Opportunities for FAST RETAIL and NVIDIA

0.13

Correlation Coefficient

FAST RETAIL  NVIDIA

Average diversification

The 3 months correlation between FAST and NVIDIA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA 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 NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and NVIDIA go up and down completely randomly.

Pair Corralation between FAST RETAIL and NVIDIA

Assuming the 90 days trading horizon FAST RETAIL is expected to generate 3.12 times less return on investment than NVIDIA. But when comparing it to its historical volatility, FAST RETAIL ADR is 1.55 times less risky than NVIDIA. It trades about 0.08 of its potential returns per unit of risk. NVIDIA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,557  in NVIDIA on October 7, 2024 and sell it today you would earn a total of  12,375  from holding NVIDIA or generate 794.8% return on investment over 90 days.

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

FAST RETAIL ADR  vs.  NVIDIA

FAST RETAIL ADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FAST RETAIL ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FAST RETAIL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

NVIDIA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, NVIDIA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FAST RETAIL and NVIDIA

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

The idea behind FAST RETAIL ADR and NVIDIA 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.