Correlation Between Torrid Holdings and Genesco

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

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

Diversification Opportunities for Torrid Holdings and Genesco

0.72

Correlation Coefficient

Torrid Holdings  Genesco

Poor diversification

The 3 months correlation between Torrid and Genesco is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Torrid Holdings and Genesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesco and Torrid Holdings 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 Torrid Holdings 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 Torrid Holdings i.e., Torrid Holdings and Genesco go up and down completely randomly.

Pair Corralation between Torrid Holdings and Genesco

Given the investment horizon of 90 days Torrid Holdings is expected to under-perform the Genesco. In addition to that, Torrid Holdings is 1.66 times more volatile than Genesco. It trades about -0.01 of its total potential returns per unit of risk. Genesco is currently generating about 0.14 per unit of volatility. If you would invest  2,434  in Genesco on September 29, 2024 and sell it today you would earn a total of  1,778  from holding Genesco or generate 73.05% return on investment over 90 days.

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

Torrid Holdings  vs.  Genesco

Torrid Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Torrid Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Torrid Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

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 Torrid Holdings and Genesco

The main advantage of trading using opposite Torrid Holdings and Genesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Torrid Holdings 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 Torrid Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..