Correlation Between Arrow Financial and GEN Restaurant

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

By analyzing existing cross correlation between Arrow Financial and GEN Restaurant Group,, you can compare the effects of market volatilities on Arrow Financial and GEN Restaurant 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 Arrow Financial with a short position of GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Financial and GEN Restaurant.

Diversification Opportunities for Arrow Financial and GEN Restaurant

0.3

Correlation Coefficient

Arrow Financial  GEN Restaurant

Weak diversification

The 3 months correlation between Arrow and GEN is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Financial and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, and Arrow Financial 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 Arrow Financial are associated (or correlated) with GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Arrow Financial i.e., Arrow Financial and GEN Restaurant go up and down completely randomly.

Pair Corralation between Arrow Financial and GEN Restaurant

Given the investment horizon of 90 days Arrow Financial is expected to under-perform the GEN Restaurant. But the stock apears to be less risky and, when comparing its historical volatility, Arrow Financial is 1.41 times less risky than GEN Restaurant. The stock trades about -0.35 of its potential returns per unit of risk. The GEN Restaurant Group, is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  828.00  in GEN Restaurant Group, on October 8, 2024 and sell it today you would lose (58.00) from holding GEN Restaurant Group, or give up 7.0% of portfolio value over 90 days.

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

Arrow Financial  vs.  GEN Restaurant Group,

Arrow Financial

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Arrow Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEN Restaurant Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Arrow Financial and GEN Restaurant

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

The idea behind Arrow Financial and GEN Restaurant Group, 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.