Correlation Between Genesco and Continental

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

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

Diversification Opportunities for Genesco and Continental

-0.78

Correlation Coefficient

Genesco  Continental

Pay attention - limited upside

The 3 months correlation between Genesco and Continental is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Genesco and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental 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 Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of Genesco i.e., Genesco and Continental go up and down completely randomly.

Pair Corralation between Genesco and Continental

Considering the 90-day investment horizon Genesco is expected to generate 1.41 times more return on investment than Continental. However, Genesco is 1.41 times more volatile than Caleres. It trades about 0.16 of its potential returns per unit of risk. Caleres is currently generating about -0.44 per unit of risk. If you would invest  4,028  in Genesco on October 24, 2024 and sell it today you would earn a total of  275.50  from holding Genesco or generate 6.84% return on investment over 90 days.

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

Genesco  vs.  Caleres

Genesco

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Genesco are ranked lower than 17 (%) 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.

Continental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caleres has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Genesco and Continental

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

The idea behind Genesco and Caleres 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.