Correlation Between GEN Restaurant and Gap,
Can any of the company-specific risk be diversified away by investing in both GEN Restaurant and Gap, 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 Gap, 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 The Gap,, you can compare the effects of market volatilities on GEN Restaurant and Gap, 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 Gap,. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEN Restaurant and Gap,.
Diversification Opportunities for GEN Restaurant and Gap,
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between GEN and Gap, is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, 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 Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and Gap, go up and down completely randomly.
Pair Corralation between GEN Restaurant and Gap,
Given the investment horizon of 90 days GEN Restaurant Group, is expected to under-perform the Gap,. In addition to that, GEN Restaurant is 1.44 times more volatile than The Gap,. It trades about -0.03 of its total potential returns per unit of risk. The Gap, is currently generating about 0.22 per unit of volatility. If you would invest 2,074 in The Gap, on September 2, 2024 and sell it today you would earn a total of 351.00 from holding The Gap, or generate 16.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEN Restaurant Group, vs. The Gap,
Performance |
| Timeline |
| GEN Restaurant Group, |
| Gap, |
GEN Restaurant and Gap, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEN Restaurant and Gap,
The main advantage of trading using opposite GEN Restaurant and Gap, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEN Restaurant position performs unexpectedly, Gap, 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 Gap, will offset losses from the drop in Gap,'s long position.The idea behind GEN Restaurant Group, and The Gap, 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.| Gap, vs. Boot Barn Holdings | Gap, vs. BJs Restaurants | Gap, vs. The Cheesecake Factory | Gap, vs. GEN Restaurant Group, |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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