Correlation Between Old Republic and GEN Restaurant

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

By analyzing existing cross correlation between Old Republic International and GEN Restaurant Group,, you can compare the effects of market volatilities on Old Republic and GEN Restaurant 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 Old Republic with a short position of GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and GEN Restaurant.

Diversification Opportunities for Old Republic and GEN Restaurant

-0.06

Correlation Coefficient

Old Republic  GEN Restaurant

Good diversification

The 3 months correlation between Old and GEN is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, and Old Republic 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 Old Republic International are associated (or correlated) with GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Old Republic i.e., Old Republic and GEN Restaurant go up and down completely randomly.

Pair Corralation between Old Republic and GEN Restaurant

Considering the 90-day investment horizon Old Republic International is expected to generate 0.29 times more return on investment than GEN Restaurant. However, Old Republic International is 3.45 times less risky than GEN Restaurant. It trades about 0.14 of its potential returns per unit of risk. GEN Restaurant Group, is currently generating about 0.0 per unit of risk. If you would invest  3,549  in Old Republic International on September 3, 2024 and sell it today you would earn a total of  348.00  from holding Old Republic International or generate 9.81% return on investment over 90 days.

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

Old Republic International  vs.  GEN Restaurant Group,

Old Republic Interna

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Old Republic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Old Republic and GEN Restaurant

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

The idea behind Old Republic International and GEN Restaurant Group, 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..