Correlation Between GEN Restaurant and CAVA Group,

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

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

Diversification Opportunities for GEN Restaurant and CAVA Group,

0.29

Correlation Coefficient

GEN Restaurant  CAVA Group,

Modest diversification

The 3 months correlation between GEN and CAVA is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and CAVA Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAVA Group, and GEN Restaurant 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 GEN Restaurant Group, are associated (or correlated) with CAVA Group,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAVA Group, has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and CAVA Group, go up and down completely randomly.

Pair Corralation between GEN Restaurant and CAVA Group,

Given the investment horizon of 90 days GEN Restaurant is expected to generate 1.14 times less return on investment than CAVA Group,. In addition to that, GEN Restaurant is 1.01 times more volatile than CAVA Group,. It trades about 0.05 of its total potential returns per unit of risk. CAVA Group, is currently generating about 0.06 per unit of volatility. If you would invest  0.00  in CAVA Group, on September 18, 2024 and sell it today you would earn a total of  12,679  from holding CAVA Group, or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.89%
Values	Daily Returns

GEN Restaurant Group,  vs.  CAVA Group,

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEN Restaurant Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

CAVA Group,

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CAVA Group, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CAVA Group, is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GEN Restaurant and CAVA Group,

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

The idea behind GEN Restaurant Group, and CAVA 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.

Check out your portfolio center.

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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.