Correlation Between Genesco and FAST RETAIL

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

By analyzing existing cross correlation between Genesco and FAST RETAIL ADR, you can compare the effects of market volatilities on Genesco and FAST RETAIL 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 RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genesco and FAST RETAIL.

Diversification Opportunities for Genesco and FAST RETAIL

0.64

Correlation Coefficient

Genesco  FAST RETAIL

Poor diversification

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

Pair Corralation between Genesco and FAST RETAIL

Assuming the 90 days horizon Genesco is expected to under-perform the FAST RETAIL. In addition to that, Genesco is 2.57 times more volatile than FAST RETAIL ADR. It trades about -0.22 of its total potential returns per unit of risk. FAST RETAIL ADR is currently generating about -0.12 per unit of volatility. If you would invest  3,220  in FAST RETAIL ADR on December 29, 2024 and sell it today you would lose (400.00) from holding FAST RETAIL ADR or give up 12.42% of portfolio value over 90 days.

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

Genesco  vs.  FAST RETAIL ADR

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. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

FAST RETAIL ADR

Risk-Adjusted Performance

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 latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Genesco and FAST RETAIL

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

The idea behind Genesco and FAST RETAIL ADR 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..