Correlation Between Gentex and Greencore Group

Can any of the company-specific risk be diversified away by investing in both Gentex and Greencore Group 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 Gentex and Greencore Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gentex and Greencore Group PLC, you can compare the effects of market volatilities on Gentex and Greencore Group 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 Gentex with a short position of Greencore Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentex and Greencore Group.

Diversification Opportunities for Gentex and Greencore Group

0.65

Correlation Coefficient

Gentex  Greencore Group

Poor diversification

The 3 months correlation between Gentex and Greencore is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Greencore Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greencore Group PLC and Gentex 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 Gentex are associated (or correlated) with Greencore Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greencore Group PLC has no effect on the direction of Gentex i.e., Gentex and Greencore Group go up and down completely randomly.

Pair Corralation between Gentex and Greencore Group

Given the investment horizon of 90 days Gentex is expected to under-perform the Greencore Group. But the stock apears to be less risky and, when comparing its historical volatility, Gentex is 1.04 times less risky than Greencore Group. The stock trades about -0.18 of its potential returns per unit of risk. The Greencore Group PLC is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  1,120  in Greencore Group PLC on December 8, 2024 and sell it today you would lose (140.00) from holding Greencore Group PLC or give up 12.5% of portfolio value over 90 days.

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

Gentex  vs.  Greencore Group PLC

Gentex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gentex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Greencore Group PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greencore Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gentex and Greencore Group

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

The idea behind Gentex and Greencore Group PLC 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.