Correlation Between Fast Retailing and ENGIE ADR/1

Can any of the company-specific risk be diversified away by investing in both Fast Retailing and ENGIE ADR/1 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 ENGIE ADR/1 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 ENGIE ADR1 EO, you can compare the effects of market volatilities on Fast Retailing and ENGIE ADR/1 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 ENGIE ADR/1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and ENGIE ADR/1.

Diversification Opportunities for Fast Retailing and ENGIE ADR/1

-0.42

Correlation Coefficient

Fast Retailing  ENGIE ADR/1

Very good diversification

The 3 months correlation between Fast and ENGIE is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and ENGIE ADR1 EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENGIE ADR1 EO 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 ENGIE ADR/1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENGIE ADR1 EO has no effect on the direction of Fast Retailing i.e., Fast Retailing and ENGIE ADR/1 go up and down completely randomly.

Pair Corralation between Fast Retailing and ENGIE ADR/1

Assuming the 90 days trading horizon Fast Retailing Co is expected to under-perform the ENGIE ADR/1. In addition to that, Fast Retailing is 1.25 times more volatile than ENGIE ADR1 EO. It trades about -0.08 of its total potential returns per unit of risk. ENGIE ADR1 EO is currently generating about 0.14 per unit of volatility. If you would invest  1,701  in ENGIE ADR1 EO on April 20, 2025 and sell it today you would earn a total of  219.00  from holding ENGIE ADR1 EO or generate 12.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Fast Retailing Co  vs.  ENGIE ADR1 EO

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. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ENGIE ADR1 EO

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ENGIE ADR1 EO are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, ENGIE ADR/1 may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Fast Retailing and ENGIE ADR/1

The main advantage of trading using opposite Fast Retailing and ENGIE ADR/1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, ENGIE ADR/1 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 ENGIE ADR/1 will offset losses from the drop in ENGIE ADR/1's long position.

The idea behind Fast Retailing Co and ENGIE ADR1 EO 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.