Correlation Between Aritzia and Genesco

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

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

Diversification Opportunities for Aritzia and Genesco

0.19

Correlation Coefficient

Aritzia  Genesco

Average diversification

The 3 months correlation between Aritzia and Genesco is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aritzia and Genesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesco and Aritzia 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 Aritzia are associated (or correlated) with Genesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesco has no effect on the direction of Aritzia i.e., Aritzia and Genesco go up and down completely randomly.

Pair Corralation between Aritzia and Genesco

Assuming the 90 days horizon Aritzia is expected to generate 1.05 times more return on investment than Genesco. However, Aritzia is 1.05 times more volatile than Genesco. It trades about 0.08 of its potential returns per unit of risk. Genesco is currently generating about 0.04 per unit of risk. If you would invest  2,105  in Aritzia on September 24, 2024 and sell it today you would earn a total of  1,660  from holding Aritzia or generate 78.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Aritzia  vs.  Genesco

Aritzia

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aritzia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aritzia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Genesco

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Genesco are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Genesco displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aritzia and Genesco

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

The idea behind Aritzia and Genesco 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.