Correlation Between Kmw and Starbucks
Can any of the company-specific risk be diversified away by investing in both Kmw and Starbucks 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 Kmw and Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kmw Inc and Starbucks, you can compare the effects of market volatilities on Kmw and Starbucks 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 Kmw with a short position of Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kmw and Starbucks.
Diversification Opportunities for Kmw and Starbucks
Average diversification
The 3 months correlation between Kmw and Starbucks is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Kmw Inc and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Kmw 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 Kmw Inc are associated (or correlated) with Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Kmw i.e., Kmw and Starbucks go up and down completely randomly.
Pair Corralation between Kmw and Starbucks
Assuming the 90 days trading horizon Kmw Inc is expected to under-perform the Starbucks. In addition to that, Kmw is 1.84 times more volatile than Starbucks. It trades about -0.05 of its total potential returns per unit of risk. Starbucks is currently generating about 0.02 per unit of volatility. If you would invest 192,624 in Starbucks on August 29, 2024 and sell it today you would earn a total of 15,976 from holding Starbucks or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.38% |
| Values | Daily Returns |
Kmw Inc vs. Starbucks
Performance |
| Timeline |
| Kmw Inc |
| Starbucks |
Kmw and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kmw and Starbucks
The main advantage of trading using opposite Kmw and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kmw position performs unexpectedly, Starbucks 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 Starbucks will offset losses from the drop in Starbucks' long position.The idea behind Kmw Inc and Starbucks 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.| Starbucks vs. DXC Technology | Starbucks vs. Grupo Sports World | Starbucks vs. Ross Stores | Starbucks vs. United States Steel |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |