Correlation Between Advanced Micro and Starbucks
Can any of the company-specific risk be diversified away by investing in both Advanced Micro 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 Advanced Micro and Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Micro Devices and Starbucks, you can compare the effects of market volatilities on Advanced Micro 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 Advanced Micro with a short position of Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and Starbucks.
Diversification Opportunities for Advanced Micro and Starbucks
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and Starbucks is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Advanced Micro 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 Advanced Micro Devices 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 Advanced Micro i.e., Advanced Micro and Starbucks go up and down completely randomly.
Pair Corralation between Advanced Micro and Starbucks
Considering the 90-day investment horizon Advanced Micro is expected to generate 1.67 times less return on investment than Starbucks. In addition to that, Advanced Micro is 1.47 times more volatile than Starbucks. It trades about 0.06 of its total potential returns per unit of risk. Starbucks is currently generating about 0.16 per unit of volatility. If you would invest 9,643 in Starbucks on September 5, 2024 and sell it today you would earn a total of 427.00 from holding Starbucks or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Micro Devices vs. Starbucks
Performance |
| Timeline |
| Advanced Micro Devices |
| Starbucks |
Advanced Micro and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Micro and Starbucks
The main advantage of trading using opposite Advanced Micro and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro 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.| Advanced Micro vs. NXP Semiconductors NV | Advanced Micro vs. Monolithic Power Systems | Advanced Micro vs. ON Semiconductor | Advanced Micro vs. GSI Technology |
| Starbucks vs. Hyatt Hotels | Starbucks vs. Smart Share Global | Starbucks vs. Wyndham Hotels Resorts | Starbucks vs. WW International |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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