Correlation Between Genuine Parts and Spotify Technology

Can any of the company-specific risk be diversified away by investing in both Genuine Parts and Spotify Technology 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 Spotify Technology 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 Spotify Technology SA, you can compare the effects of market volatilities on Genuine Parts and Spotify Technology 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 Spotify Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genuine Parts and Spotify Technology.

Diversification Opportunities for Genuine Parts and Spotify Technology

0.13

Correlation Coefficient

Genuine Parts  Spotify Technology

Average diversification

The 3 months correlation between Genuine and Spotify is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts Co and Spotify Technology SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spotify Technology 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 Spotify Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spotify Technology has no effect on the direction of Genuine Parts i.e., Genuine Parts and Spotify Technology go up and down completely randomly.

Pair Corralation between Genuine Parts and Spotify Technology

Considering the 90-day investment horizon Genuine Parts Co is expected to generate 0.58 times more return on investment than Spotify Technology. However, Genuine Parts Co is 1.72 times less risky than Spotify Technology. It trades about 0.11 of its potential returns per unit of risk. Spotify Technology SA is currently generating about 0.0 per unit of risk. If you would invest  11,931  in Genuine Parts Co on May 2, 2025 and sell it today you would earn a total of  1,220  from holding Genuine Parts Co or generate 10.23% return on investment over 90 days.

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

Genuine Parts Co  vs.  Spotify Technology SA

Genuine Parts

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genuine Parts Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Genuine Parts may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Spotify Technology

Risk-Adjusted Performance

Weak

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

Pair Trading with Genuine Parts and Spotify Technology

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

The idea behind Genuine Parts Co and Spotify Technology SA 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.