Correlation Between GEN Restaurant and Independence Realty

Can any of the company-specific risk be diversified away by investing in both GEN Restaurant and Independence Realty 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 Independence Realty 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 Independence Realty Trust, you can compare the effects of market volatilities on GEN Restaurant and Independence Realty 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 Independence Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEN Restaurant and Independence Realty.

Diversification Opportunities for GEN Restaurant and Independence Realty

-0.73

Correlation Coefficient

GEN Restaurant  Independence Realty

Pay attention - limited upside

The 3 months correlation between GEN and Independence is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and Independence Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Realty Trust 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 Independence Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Realty Trust has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and Independence Realty go up and down completely randomly.

Pair Corralation between GEN Restaurant and Independence Realty

Given the investment horizon of 90 days GEN Restaurant Group, is expected to under-perform the Independence Realty. In addition to that, GEN Restaurant is 3.4 times more volatile than Independence Realty Trust. It trades about -0.07 of its total potential returns per unit of risk. Independence Realty Trust is currently generating about 0.09 per unit of volatility. If you would invest  1,949  in Independence Realty Trust on December 29, 2024 and sell it today you would earn a total of  137.00  from holding Independence Realty Trust or generate 7.03% return on investment over 90 days.

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

GEN Restaurant Group,  vs.  Independence Realty Trust

GEN Restaurant Group,

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Independence Realty Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Independence Realty Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Independence Realty may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GEN Restaurant and Independence Realty

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

The idea behind GEN Restaurant Group, and Independence Realty Trust 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.