Correlation Between GEN Restaurant and Sweetgreen

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

Diversification Opportunities for GEN Restaurant and Sweetgreen

0.83

Correlation Coefficient

GEN Restaurant  Sweetgreen

Very poor diversification

The 3 months correlation between GEN and Sweetgreen is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen 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 Sweetgreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweetgreen has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and Sweetgreen go up and down completely randomly.

Pair Corralation between GEN Restaurant and Sweetgreen

Given the investment horizon of 90 days GEN Restaurant Group, is expected to under-perform the Sweetgreen. In addition to that, GEN Restaurant is 1.13 times more volatile than Sweetgreen. It trades about -0.08 of its total potential returns per unit of risk. Sweetgreen is currently generating about -0.07 per unit of volatility. If you would invest  3,237  in Sweetgreen on December 27, 2024 and sell it today you would lose (608.00) from holding Sweetgreen or give up 18.78% of portfolio value over 90 days.

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

GEN Restaurant Group,  vs.  Sweetgreen

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 weak 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.

Sweetgreen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sweetgreen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GEN Restaurant and Sweetgreen

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

The idea behind GEN Restaurant Group, and Sweetgreen 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.