Correlation Between Genesco and Fast Retailing

Can any of the company-specific risk be diversified away by investing in both Genesco 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 Genesco and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Genesco and Fast Retailing Co, you can compare the effects of market volatilities on Genesco 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 Genesco with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genesco and Fast Retailing.

Diversification Opportunities for Genesco and Fast Retailing

0.2

Correlation Coefficient

Genesco  Fast Retailing

Modest diversification

The 3 months correlation between Genesco and Fast is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Genesco and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and Genesco 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 Genesco 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 Genesco i.e., Genesco and Fast Retailing go up and down completely randomly.

Pair Corralation between Genesco and Fast Retailing

Considering the 90-day investment horizon Genesco is expected to under-perform the Fast Retailing. In addition to that, Genesco is 2.16 times more volatile than Fast Retailing Co. It trades about -0.25 of its total potential returns per unit of risk. Fast Retailing Co is currently generating about -0.04 per unit of volatility. If you would invest  33,260  in Fast Retailing Co on December 28, 2024 and sell it today you would lose (1,659) from holding Fast Retailing Co or give up 4.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Genesco  vs.  Fast Retailing Co

Genesco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genesco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fast Retailing

Risk-Adjusted Performance

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.

Pair Trading with Genesco and Fast Retailing

The main advantage of trading using opposite Genesco and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genesco 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.

The idea behind Genesco and Fast Retailing Co 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.