Correlation Between Fast Retailing and Genesco

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

Diversification Opportunities for Fast Retailing and Genesco

0.01

Correlation Coefficient

Fast Retailing  Genesco

Significant diversification

The 3 months correlation between Fast and Genesco is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Genesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesco 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 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 Retailing i.e., Fast Retailing and Genesco go up and down completely randomly.

Pair Corralation between Fast Retailing and Genesco

Assuming the 90 days horizon Fast Retailing is expected to generate 3.3 times less return on investment than Genesco. But when comparing it to its historical volatility, Fast Retailing Co is 3.32 times less risky than Genesco. It trades about 0.24 of its potential returns per unit of risk. Genesco is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3,491  in Genesco on September 24, 2024 and sell it today you would earn a total of  637.00  from holding Genesco or generate 18.25% return on investment over 90 days.

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

Fast Retailing Co  vs.  Genesco

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.

Genesco

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Genesco are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Genesco displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fast Retailing and Genesco

The main advantage of trading using opposite Fast Retailing and Genesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing 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 Retailing Co 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 Commodity Directory module to find actively traded commodities issued by global exchanges.