Correlation Between GEN Restaurant and Nasdaq

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

Diversification Opportunities for GEN Restaurant and Nasdaq

0.15

Correlation Coefficient

GEN Restaurant  Nasdaq

Average diversification

The 3 months correlation between GEN and Nasdaq is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc 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 Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and Nasdaq go up and down completely randomly.

Pair Corralation between GEN Restaurant and Nasdaq

Given the investment horizon of 90 days GEN Restaurant Group, is expected to under-perform the Nasdaq. In addition to that, GEN Restaurant is 5.03 times more volatile than Nasdaq Inc. It trades about -0.14 of its total potential returns per unit of risk. Nasdaq Inc is currently generating about 0.06 per unit of volatility. If you would invest  7,942  in Nasdaq Inc on September 12, 2024 and sell it today you would earn a total of  101.00  from holding Nasdaq Inc or generate 1.27% return on investment over 90 days.

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

GEN Restaurant Group,  vs.  Nasdaq Inc

GEN Restaurant Group,

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GEN Restaurant Group, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Nasdaq Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GEN Restaurant and Nasdaq

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

The idea behind GEN Restaurant Group, and Nasdaq Inc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.