Correlation Between GEN Restaurant and Vestis

Can any of the company-specific risk be diversified away by investing in both GEN Restaurant and Vestis 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 Vestis 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 Vestis, you can compare the effects of market volatilities on GEN Restaurant and Vestis 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 Vestis. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEN Restaurant and Vestis.

Diversification Opportunities for GEN Restaurant and Vestis

-0.47

Correlation Coefficient

GEN Restaurant  Vestis

Very good diversification

The 3 months correlation between GEN and Vestis is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and Vestis go up and down completely randomly.

Pair Corralation between GEN Restaurant and Vestis

Given the investment horizon of 90 days GEN Restaurant is expected to generate 3.35 times less return on investment than Vestis. In addition to that, GEN Restaurant is 1.22 times more volatile than Vestis. It trades about 0.03 of its total potential returns per unit of risk. Vestis is currently generating about 0.11 per unit of volatility. If you would invest  1,365  in Vestis on September 4, 2024 and sell it today you would earn a total of  274.00  from holding Vestis or generate 20.07% return on investment over 90 days.

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

GEN Restaurant Group,  vs.  Vestis

GEN Restaurant Group,

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GEN Restaurant Group, are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Vestis

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vestis are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Vestis unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GEN Restaurant and Vestis

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

The idea behind GEN Restaurant Group, and Vestis 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.