Correlation Between GEN Restaurant and Life360, Common

Can any of the company-specific risk be diversified away by investing in both GEN Restaurant and Life360, Common 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 Life360, Common 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 Life360, Common Stock, you can compare the effects of market volatilities on GEN Restaurant and Life360, Common 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 Life360, Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEN Restaurant and Life360, Common.

Diversification Opportunities for GEN Restaurant and Life360, Common

0.47

Correlation Coefficient

GEN Restaurant  Life360, Common

Very weak diversification

The 3 months correlation between GEN and Life360, is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and Life360, Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life360, Common Stock 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 Life360, Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life360, Common Stock has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and Life360, Common go up and down completely randomly.

Pair Corralation between GEN Restaurant and Life360, Common

Given the investment horizon of 90 days GEN Restaurant Group, is expected to under-perform the Life360, Common. In addition to that, GEN Restaurant is 1.51 times more volatile than Life360, Common Stock. It trades about -0.16 of its total potential returns per unit of risk. Life360, Common Stock is currently generating about -0.04 per unit of volatility. If you would invest  4,381  in Life360, Common Stock on October 8, 2024 and sell it today you would lose (64.00) from holding Life360, Common Stock or give up 1.46% of portfolio value over 90 days.

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

GEN Restaurant Group,  vs.  Life360, Common Stock

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 latest stock price mess, may contribute to short-term losses for the institutional investors.

Life360, Common Stock

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Life360, Common Stock are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Life360, Common may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GEN Restaurant and Life360, Common

The main advantage of trading using opposite GEN Restaurant and Life360, Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEN Restaurant position performs unexpectedly, Life360, Common 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 Life360, Common will offset losses from the drop in Life360, Common's long position.

The idea behind GEN Restaurant Group, and Life360, Common Stock 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.