Correlation Between Genesco and ABC MartInc

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

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

Diversification Opportunities for Genesco and ABC MartInc

0.0

Correlation Coefficient

Genesco  ABC MartInc

Pay attention - limited upside

The 3 months correlation between Genesco and ABC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Genesco and ABC MartInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC MartInc and Genesco 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 Genesco are associated (or correlated) with ABC MartInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC MartInc has no effect on the direction of Genesco i.e., Genesco and ABC MartInc go up and down completely randomly.

Pair Corralation between Genesco and ABC MartInc

If you would invest  3,491  in Genesco on September 25, 2024 and sell it today you would earn a total of  637.00  from holding Genesco or generate 18.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Genesco  vs.  ABC MartInc

Genesco

Risk-Adjusted Performance

16 of 100

Good

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.

ABC MartInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABC MartInc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ABC MartInc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Genesco and ABC MartInc

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

The idea behind Genesco and ABC MartInc 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.