Correlation Between Genuine Parts and Envela Corp

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

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

Diversification Opportunities for Genuine Parts and Envela Corp

-0.05

Correlation Coefficient

Genuine Parts  Envela Corp

Good diversification

The 3 months correlation between Genuine and Envela is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts Co and Envela Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Envela Corp and Genuine Parts 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 Genuine Parts Co are associated (or correlated) with Envela Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Envela Corp has no effect on the direction of Genuine Parts i.e., Genuine Parts and Envela Corp go up and down completely randomly.

Pair Corralation between Genuine Parts and Envela Corp

Considering the 90-day investment horizon Genuine Parts Co is expected to generate 1.64 times more return on investment than Envela Corp. However, Genuine Parts is 1.64 times more volatile than Envela Corp. It trades about 0.12 of its potential returns per unit of risk. Envela Corp is currently generating about -0.12 per unit of risk. If you would invest  15,361  in Genuine Parts Co on January 24, 2024 and sell it today you would earn a total of  948.00  from holding Genuine Parts Co or generate 6.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Genuine Parts Co  vs.  Envela Corp

Genuine Parts

Risk-Adjusted Performance

11 of 100

Good

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

Envela Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Envela Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Envela Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Genuine Parts and Envela Corp

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

The idea behind Genuine Parts Co and Envela Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.