Correlation Between Genesco and Stitch Fix

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

By analyzing existing cross correlation between Genesco and Stitch Fix, you can compare the effects of market volatilities on Genesco and Stitch Fix 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 Stitch Fix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genesco and Stitch Fix.

Diversification Opportunities for Genesco and Stitch Fix

0.8

Correlation Coefficient

Genesco  Stitch Fix

Very poor diversification

The 3 months correlation between Genesco and Stitch is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Genesco and Stitch Fix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stitch Fix 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 Stitch Fix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stitch Fix has no effect on the direction of Genesco i.e., Genesco and Stitch Fix go up and down completely randomly.

Pair Corralation between Genesco and Stitch Fix

Considering the 90-day investment horizon Genesco is expected to generate 0.69 times more return on investment than Stitch Fix. However, Genesco is 1.45 times less risky than Stitch Fix. It trades about -0.1 of its potential returns per unit of risk. Stitch Fix is currently generating about -0.19 per unit of risk. If you would invest  2,717  in Genesco on February 2, 2024 and sell it today you would lose (142.00) from holding Genesco or give up 5.23% of portfolio value over 90 days.

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

Genesco  vs.  Stitch Fix

Genesco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Stitch Fix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stitch Fix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Genesco and Stitch Fix

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

The idea behind Genesco and Stitch Fix 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.