Correlation Between Cannae Holdings and Starbucks
Can any of the company-specific risk be diversified away by investing in both Cannae Holdings 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 Cannae Holdings and Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cannae Holdings and Starbucks, you can compare the effects of market volatilities on Cannae Holdings 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 Cannae Holdings with a short position of Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cannae Holdings and Starbucks.
Diversification Opportunities for Cannae Holdings and Starbucks
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cannae and Starbucks is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cannae Holdings and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Cannae Holdings 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 Cannae Holdings 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 Cannae Holdings i.e., Cannae Holdings and Starbucks go up and down completely randomly.
Pair Corralation between Cannae Holdings and Starbucks
Given the investment horizon of 90 days Cannae Holdings is expected to generate 1.24 times less return on investment than Starbucks. But when comparing it to its historical volatility, Cannae Holdings is 1.04 times less risky than Starbucks. It trades about 0.01 of its potential returns per unit of risk. Starbucks is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 9,724 in Starbucks on August 28, 2024 and sell it today you would earn a total of 460.00 from holding Starbucks or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cannae Holdings vs. Starbucks
Performance |
| Timeline |
| Cannae Holdings |
| Starbucks |
Cannae Holdings and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cannae Holdings and Starbucks
The main advantage of trading using opposite Cannae Holdings and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cannae Holdings 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.| Cannae Holdings vs. Brightsphere Investment Group | Cannae Holdings vs. Adtalem Global Education | Cannae Holdings vs. ConnectOne Bancorp | Cannae Holdings vs. Aquagold International |
| Starbucks vs. Chipotle Mexican Grill | Starbucks vs. Dominos Pizza | Starbucks vs. Yum Brands | Starbucks vs. The Wendys Co |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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