Correlation Between GEN Restaurant and Worthington Steel

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

Diversification Opportunities for GEN Restaurant and Worthington Steel

0.27

Correlation Coefficient

GEN Restaurant  Worthington Steel

Modest diversification

The 3 months correlation between GEN and Worthington is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel 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 Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and Worthington Steel go up and down completely randomly.

Pair Corralation between GEN Restaurant and Worthington Steel

Given the investment horizon of 90 days GEN Restaurant is expected to generate 13.44 times less return on investment than Worthington Steel. In addition to that, GEN Restaurant is 1.17 times more volatile than Worthington Steel. It trades about 0.01 of its total potential returns per unit of risk. Worthington Steel is currently generating about 0.15 per unit of volatility. If you would invest  3,313  in Worthington Steel on September 14, 2024 and sell it today you would earn a total of  1,036  from holding Worthington Steel or generate 31.27% return on investment over 90 days.

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

GEN Restaurant Group,  vs.  Worthington Steel

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

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 quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Worthington Steel

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Worthington Steel are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Worthington Steel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GEN Restaurant and Worthington Steel

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

The idea behind GEN Restaurant Group, and Worthington Steel 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.