Correlation Between Gen Digital and Cable One

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

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

Diversification Opportunities for Gen Digital and Cable One

0.72

Correlation Coefficient

Gen Digital  Cable One

Poor diversification

The 3 months correlation between Gen and Cable is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Gen Digital and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One and Gen Digital 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 Digital are associated (or correlated) with Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of Gen Digital i.e., Gen Digital and Cable One go up and down completely randomly.

Pair Corralation between Gen Digital and Cable One

Assuming the 90 days trading horizon Gen Digital is expected to generate 0.17 times more return on investment than Cable One. However, Gen Digital is 6.05 times less risky than Cable One. It trades about -0.12 of its potential returns per unit of risk. Cable One is currently generating about -0.17 per unit of risk. If you would invest  17,839  in Gen Digital on December 23, 2024 and sell it today you would lose (839.00) from holding Gen Digital or give up 4.7% of portfolio value over 90 days.

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

Gen Digital  vs.  Cable One

Gen Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gen Digital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Gen Digital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cable One

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cable One 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 somewhat 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 Gen Digital and Cable One

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

The idea behind Gen Digital and Cable One 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 CEOs Directory module to screen CEOs from public companies around the world.