Correlation Between Fast Retailing and Privia Health

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

Diversification Opportunities for Fast Retailing and Privia Health

-0.26

Correlation Coefficient

Fast Retailing  Privia Health

Very good diversification

The 3 months correlation between Fast and Privia is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Privia Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Privia Health Group 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 Privia Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Privia Health Group has no effect on the direction of Fast Retailing i.e., Fast Retailing and Privia Health go up and down completely randomly.

Pair Corralation between Fast Retailing and Privia Health

Assuming the 90 days horizon Fast Retailing Co is expected to generate 0.85 times more return on investment than Privia Health. However, Fast Retailing Co is 1.18 times less risky than Privia Health. It trades about 0.08 of its potential returns per unit of risk. Privia Health Group is currently generating about 0.01 per unit of risk. If you would invest  22,029  in Fast Retailing Co on September 24, 2024 and sell it today you would earn a total of  11,231  from holding Fast Retailing Co or generate 50.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.04%
Values	Daily Returns

Fast Retailing Co  vs.  Privia Health Group

Fast Retailing

Risk-Adjusted Performance

5 of 100

Modest

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

Privia Health Group

Risk-Adjusted Performance

5 of 100

Insignificant

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

Pair Trading with Fast Retailing and Privia Health

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

The idea behind Fast Retailing Co and Privia Health Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.