Correlation Between GEN Restaurant and Target Hospitality

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

Diversification Opportunities for GEN Restaurant and Target Hospitality

0.52

Correlation Coefficient

GEN Restaurant  Target Hospitality

Very weak diversification

The 3 months correlation between GEN and Target is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and Target Hospitality Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Hospitality Corp 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 Target Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Hospitality Corp has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and Target Hospitality go up and down completely randomly.

Pair Corralation between GEN Restaurant and Target Hospitality

Given the investment horizon of 90 days GEN Restaurant Group, is expected to generate 0.66 times more return on investment than Target Hospitality. However, GEN Restaurant Group, is 1.52 times less risky than Target Hospitality. It trades about -0.06 of its potential returns per unit of risk. Target Hospitality Corp is currently generating about -0.08 per unit of risk. If you would invest  790.00  in GEN Restaurant Group, on December 17, 2024 and sell it today you would lose (157.00) from holding GEN Restaurant Group, or give up 19.87% 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.  Target Hospitality Corp

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 inconsistent 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.

Target Hospitality Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Target Hospitality Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with GEN Restaurant and Target Hospitality

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

The idea behind GEN Restaurant Group, and Target Hospitality Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.