Correlation Between Genesco and Revolve Group

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

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

Diversification Opportunities for Genesco and Revolve Group

0.55

Correlation Coefficient

Genesco  Revolve Group

Very weak diversification

The 3 months correlation between Genesco and Revolve is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Genesco and Revolve Group LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolve Group LLC 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 Revolve Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolve Group LLC has no effect on the direction of Genesco i.e., Genesco and Revolve Group go up and down completely randomly.

Pair Corralation between Genesco and Revolve Group

Considering the 90-day investment horizon Genesco is expected to generate 1.4 times less return on investment than Revolve Group. In addition to that, Genesco is 1.05 times more volatile than Revolve Group LLC. It trades about 0.01 of its total potential returns per unit of risk. Revolve Group LLC is currently generating about 0.02 per unit of volatility. If you would invest  3,033  in Revolve Group LLC on October 25, 2024 and sell it today you would earn a total of  88.00  from holding Revolve Group LLC or generate 2.9% return on investment over 90 days.

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

Genesco  vs.  Revolve Group LLC

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.

Revolve Group LLC

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Genesco and Revolve Group

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

The idea behind Genesco and Revolve Group LLC 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.