Correlation Between Fast Retailing and Innventure,

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

Diversification Opportunities for Fast Retailing and Innventure,

0.34

Correlation Coefficient

Fast Retailing  Innventure,

Weak diversification

The 3 months correlation between Fast and Innventure, is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Innventure, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innventure, 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 Innventure,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innventure, has no effect on the direction of Fast Retailing i.e., Fast Retailing and Innventure, go up and down completely randomly.

Pair Corralation between Fast Retailing and Innventure,

Assuming the 90 days horizon Fast Retailing Co is expected to generate 4.55 times more return on investment than Innventure,. However, Fast Retailing is 4.55 times more volatile than Innventure,. It trades about 0.05 of its potential returns per unit of risk. Innventure, is currently generating about 0.04 per unit of risk. If you would invest  19,143  in Fast Retailing Co on October 5, 2024 and sell it today you would earn a total of  14,117  from holding Fast Retailing Co or generate 73.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	74.79%
Values	Daily Returns

Fast Retailing Co  vs.  Innventure,

Fast Retailing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fast Retailing Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fast Retailing is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Innventure,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Innventure, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Innventure, showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fast Retailing and Innventure,

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

The idea behind Fast Retailing Co and Innventure, 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.