Correlation Between Genesco and Guess
Can any of the company-specific risk be diversified away by investing in both Genesco and Guess 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 Genesco and Guess into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genesco and Guess Inc, you can compare the effects of market volatilities on Genesco and Guess 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 Genesco with a short position of Guess. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genesco and Guess.
Diversification Opportunities for Genesco and Guess
Very good diversification
The 3 months correlation between Genesco and Guess is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Genesco and Guess Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guess Inc and Genesco 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 Genesco are associated (or correlated) with Guess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guess Inc has no effect on the direction of Genesco i.e., Genesco and Guess go up and down completely randomly.
Pair Corralation between Genesco and Guess
Considering the 90-day investment horizon Genesco is expected to generate 0.99 times more return on investment than Guess. However, Genesco is 1.01 times less risky than Guess. It trades about 0.09 of its potential returns per unit of risk. Guess Inc is currently generating about -0.02 per unit of risk. If you would invest 2,560 in Genesco on January 25, 2024 and sell it today you would earn a total of 117.00 from holding Genesco or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genesco vs. Guess Inc
Performance |
| Timeline |
| Genesco |
| Guess Inc |
Genesco and Guess Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genesco and Guess
The main advantage of trading using opposite Genesco and Guess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genesco position performs unexpectedly, Guess 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 Guess will offset losses from the drop in Guess' long position.The idea behind Genesco and Guess Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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