Correlation Between Sweetgreen and GEN Restaurant

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

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

Diversification Opportunities for Sweetgreen and GEN Restaurant

0.88

Correlation Coefficient

Sweetgreen  GEN Restaurant

Very poor diversification

The 3 months correlation between Sweetgreen and GEN is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, and Sweetgreen 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 Sweetgreen are associated (or correlated) with GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Sweetgreen i.e., Sweetgreen and GEN Restaurant go up and down completely randomly.

Pair Corralation between Sweetgreen and GEN Restaurant

Allowing for the 90-day total investment horizon Sweetgreen is expected to under-perform the GEN Restaurant. In addition to that, Sweetgreen is 1.62 times more volatile than GEN Restaurant Group,. It trades about -0.19 of its total potential returns per unit of risk. GEN Restaurant Group, is currently generating about -0.27 per unit of volatility. If you would invest  819.00  in GEN Restaurant Group, on December 5, 2024 and sell it today you would lose (304.00) from holding GEN Restaurant Group, or give up 37.12% of portfolio value over 90 days.

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

Sweetgreen  vs.  GEN Restaurant Group,

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.

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 abnormal 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.

Pair Trading with Sweetgreen and GEN Restaurant

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

The idea behind Sweetgreen and GEN Restaurant Group, 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.