Correlation Between Johnson Electric and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Johnson Electric 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 Johnson Electric and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Electric Holdings and Fast Retailing Co, you can compare the effects of market volatilities on Johnson Electric 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 Johnson Electric with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Electric and Fast Retailing.
Diversification Opportunities for Johnson Electric and Fast Retailing
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Johnson and Fast is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Electric Holdings and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and Johnson Electric 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 Johnson Electric Holdings 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 Johnson Electric i.e., Johnson Electric and Fast Retailing go up and down completely randomly.
Pair Corralation between Johnson Electric and Fast Retailing
Assuming the 90 days trading horizon Johnson Electric Holdings is expected to generate 1.97 times more return on investment than Fast Retailing. However, Johnson Electric is 1.97 times more volatile than Fast Retailing Co. It trades about 0.07 of its potential returns per unit of risk. Fast Retailing Co is currently generating about 0.07 per unit of risk. If you would invest 48.00 in Johnson Electric Holdings on October 10, 2024 and sell it today you would earn a total of 84.00 from holding Johnson Electric Holdings or generate 175.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Johnson Electric Holdings vs. Fast Retailing Co
Performance |
Timeline |
Johnson Electric Holdings |
Fast Retailing |
Johnson Electric and Fast Retailing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Johnson Electric and Fast Retailing
The main advantage of trading using opposite Johnson Electric and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Electric 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.Johnson Electric vs. Fast Retailing Co | Johnson Electric vs. MARKET VECTR RETAIL | Johnson Electric vs. H2O Retailing | Johnson Electric vs. SK TELECOM TDADR |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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