Guess stock(NYSE: GES), a retailer that designs, markets, distributes, and licenses apparel and accessories for men, women, and children, has declined 3% over the last week (five trading days) to levels of around $28 currently. But will the company’s stock see higher levels over the coming weeks, or is a decline in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price, returns for GES stock average around 2.7% in the next one month (twenty-one trading days) period after experiencing a 2.6% fall in a week.
But how would these numbers change if you are interested in holding GES stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Guess stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!
MACHINE LEARNING ENGINE – try it yourself:
IF GES stock moved by -5% over five trading days, THEN over the next twenty-one trading days, GES stock moves an average of 3.8%, which implies an excess return of 2.3% compared to the S&P500.
More importantly, there is a 60% probability of a positive return over the next twenty-one trading days and a 54% probability of a positive excess return after a -5% change over five trading days.
Some Fun Scenarios, FAQs & Making Sense of Guess Stock Movements:
Question 1: Is the average return for GES stock higher after a drop?
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Answer: Consider two situations,
Case 1: GES stock drops by -5% or more in a week
Case 2: GES stock rises by 5% or more in a week
Is the average return for GES stock higher over the subsequent month after Case 1 or Case 2?
GES stock fares better after Case 1, with an average return of 3.9% over the next month (twenty-one trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 0.4% for Case 2.
Try the Trefis machine learning engine above to see for yourself how GES stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
Answer: If you buy and hold GES stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For GES stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
You can try the engine to see what this table looks like for Guess after a larger loss over the last week, month, or quarter.
Question 3: What about the average return after a rise if you wait for a while?
Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.
GES returns over the next N days after a 5% change over the last five trading days are detailed in the table below, along with the returns for the S&P500:It’s pretty powerful to test the trend for yourself for GES by changing the inputs in the charts above.
E-commerce is eating into retail sales, but this might be an investment opportunity. See our theme on E-commerce Stocks for a diverse list of companies that stand to benefit from the big shift.