Correlation Between Fast Retailing and Aritzia

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

Diversification Opportunities for Fast Retailing and Aritzia

-0.12

Correlation Coefficient

Fast Retailing  Aritzia

Good diversification

The 3 months correlation between Fast and Aritzia is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Aritzia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aritzia 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 Aritzia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aritzia has no effect on the direction of Fast Retailing i.e., Fast Retailing and Aritzia go up and down completely randomly.

Pair Corralation between Fast Retailing and Aritzia

Assuming the 90 days horizon Fast Retailing Co is expected to under-perform the Aritzia. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fast Retailing Co is 1.39 times less risky than Aritzia. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Aritzia is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  3,528  in Aritzia on May 1, 2025 and sell it today you would earn a total of  1,892  from holding Aritzia or generate 53.63% return on investment over 90 days.

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

Fast Retailing Co  vs.  Aritzia

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 latest weak 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.

Aritzia

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aritzia are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Aritzia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fast Retailing and Aritzia

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

The idea behind Fast Retailing Co and Aritzia 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.