Correlation Between GEN Restaurant and Westrock Coffee

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

Diversification Opportunities for GEN Restaurant and Westrock Coffee

0.58

Correlation Coefficient

GEN Restaurant  Westrock Coffee

Very weak diversification

The 3 months correlation between GEN and Westrock is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee 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 Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and Westrock Coffee go up and down completely randomly.

Pair Corralation between GEN Restaurant and Westrock Coffee

Given the investment horizon of 90 days GEN Restaurant Group, is expected to under-perform the Westrock Coffee. In addition to that, GEN Restaurant is 1.66 times more volatile than Westrock Coffee. It trades about -0.03 of its total potential returns per unit of risk. Westrock Coffee is currently generating about -0.03 per unit of volatility. If you would invest  1,125  in Westrock Coffee on December 2, 2024 and sell it today you would lose (487.00) from holding Westrock Coffee or give up 43.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.05%
Values	Daily Returns

GEN Restaurant Group,  vs.  Westrock Coffee

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.

Westrock Coffee

Risk-Adjusted Performance

Very Weak

Over the last 90 days Westrock Coffee has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GEN Restaurant and Westrock Coffee

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

The idea behind GEN Restaurant Group, and Westrock Coffee 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.