Correlation Between Gap and Genesco

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

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

Diversification Opportunities for Gap and Genesco

-0.29

Correlation Coefficient

Gap  Genesco

Very good diversification

The 3 months correlation between Gap and Genesco is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Gap Inc and Genesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesco and Gap 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 Gap 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 Gap i.e., Gap and Genesco go up and down completely randomly.

Pair Corralation between Gap and Genesco

If you would invest  3,127  in Genesco on September 3, 2024 and sell it today you would earn a total of  232.00  from holding Genesco or generate 7.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Gap Inc  vs.  Genesco

Gap Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gap Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gap is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Gap and Genesco

The main advantage of trading using opposite Gap and Genesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap 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 Gap 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..