Correlation Between FAST RETAIL and Genesco

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

Diversification Opportunities for FAST RETAIL and Genesco

0.64

Correlation Coefficient

FAST RETAIL  Genesco

Poor diversification

The 3 months correlation between FAST and Genesco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and Genesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesco 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 Genesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesco has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and Genesco go up and down completely randomly.

Pair Corralation between FAST RETAIL and Genesco

Assuming the 90 days trading horizon FAST RETAIL ADR is expected to under-perform the Genesco. But the stock apears to be less risky and, when comparing its historical volatility, FAST RETAIL ADR is 1.9 times less risky than Genesco. The stock trades about -0.03 of its potential returns per unit of risk. The Genesco is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,700  in Genesco on October 22, 2024 and sell it today you would earn a total of  1,200  from holding Genesco or generate 44.44% return on investment over 90 days.

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

FAST RETAIL ADR  vs.  Genesco

FAST RETAIL ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Genesco

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genesco are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Genesco reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FAST RETAIL and Genesco

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

The idea behind FAST RETAIL ADR and Genesco 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.