Correlation Between Super Retail and Genesis Energy

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

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

Diversification Opportunities for Super Retail and Genesis Energy

-0.36

Correlation Coefficient

Super Retail  Genesis Energy

Very good diversification

The 3 months correlation between Super and Genesis is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Super Retail Group and Genesis Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Energy and Super Retail 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 Super Retail Group are associated (or correlated) with Genesis Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Energy has no effect on the direction of Super Retail i.e., Super Retail and Genesis Energy go up and down completely randomly.

Pair Corralation between Super Retail and Genesis Energy

Assuming the 90 days trading horizon Super Retail Group is expected to under-perform the Genesis Energy. But the stock apears to be less risky and, when comparing its historical volatility, Super Retail Group is 1.14 times less risky than Genesis Energy. The stock trades about -0.15 of its potential returns per unit of risk. The Genesis Energy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  189.00  in Genesis Energy on October 6, 2024 and sell it today you would earn a total of  15.00  from holding Genesis Energy or generate 7.94% return on investment over 90 days.

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

Super Retail Group  vs.  Genesis Energy

Super Retail Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Super Retail Group 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 essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Genesis Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Genesis Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Genesis Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Super Retail and Genesis Energy

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

The idea behind Super Retail Group and Genesis Energy 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.

Check out your portfolio center.

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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.