Correlation Between Genesco and Lulus Fashion

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

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

Diversification Opportunities for Genesco and Lulus Fashion

-0.4

Correlation Coefficient

Genesco  Lulus Fashion

Very good diversification

The 3 months correlation between Genesco and Lulus is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Genesco and Lulus Fashion Lounge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lulus Fashion Lounge and Genesco 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 Genesco are associated (or correlated) with Lulus Fashion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lulus Fashion Lounge has no effect on the direction of Genesco i.e., Genesco and Lulus Fashion go up and down completely randomly.

Pair Corralation between Genesco and Lulus Fashion

Considering the 90-day investment horizon Genesco is expected to generate 0.45 times more return on investment than Lulus Fashion. However, Genesco is 2.21 times less risky than Lulus Fashion. It trades about 0.34 of its potential returns per unit of risk. Lulus Fashion Lounge is currently generating about -0.01 per unit of risk. If you would invest  2,492  in Genesco on September 2, 2024 and sell it today you would earn a total of  867.00  from holding Genesco or generate 34.79% return on investment over 90 days.

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

Genesco  vs.  Lulus Fashion Lounge

Genesco

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Genesco are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Genesco may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lulus Fashion Lounge

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lulus Fashion Lounge are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Lulus Fashion may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Genesco and Lulus Fashion

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

The idea behind Genesco and Lulus Fashion Lounge 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.