Correlation Between Genesco and Birks

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

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

Diversification Opportunities for Genesco and Birks

-0.88

Correlation Coefficient

Genesco  Birks

Pay attention - limited upside

The 3 months correlation between Genesco and Birks is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Genesco and Birks Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birks Group 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 Birks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birks Group has no effect on the direction of Genesco i.e., Genesco and Birks go up and down completely randomly.

Pair Corralation between Genesco and Birks

Considering the 90-day investment horizon Genesco is expected to generate 1.07 times more return on investment than Birks. However, Genesco is 1.07 times more volatile than Birks Group. It trades about 0.01 of its potential returns per unit of risk. Birks Group is currently generating about -0.07 per unit of risk. If you would invest  4,946  in Genesco on October 25, 2024 and sell it today you would lose (634.00) from holding Genesco or give up 12.82% of portfolio value over 90 days.

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

Genesco  vs.  Birks Group

Genesco

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Genesco are ranked lower than 19 (%) 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.

Birks Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Birks Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Genesco and Birks

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

The idea behind Genesco and Birks 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.