Correlation Between Guess and Genesco

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

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

Diversification Opportunities for Guess and Genesco

-0.21

Correlation Coefficient

Guess  Genesco

Very good diversification

The 3 months correlation between Guess and Genesco is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Guess Inc and Genesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesco and Guess 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 Guess Inc are associated (or correlated) with Genesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesco has no effect on the direction of Guess i.e., Guess and Genesco go up and down completely randomly.

Pair Corralation between Guess and Genesco

Considering the 90-day investment horizon Guess Inc is expected to under-perform the Genesco. But the stock apears to be less risky and, when comparing its historical volatility, Guess Inc is 1.83 times less risky than Genesco. The stock trades about -0.14 of its potential returns per unit of risk. The Genesco is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,019  in Genesco on August 30, 2024 and sell it today you would earn a total of  443.00  from holding Genesco or generate 14.67% return on investment over 90 days.

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

Guess Inc  vs.  Genesco

Guess Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guess Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Genesco

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Genesco are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Genesco displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guess and Genesco

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

The idea behind Guess Inc and Genesco 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.