Correlation Between Deluxe and Sweetgreen
Can any of the company-specific risk be diversified away by investing in both Deluxe and Sweetgreen 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 Deluxe and Sweetgreen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deluxe and Sweetgreen, you can compare the effects of market volatilities on Deluxe and Sweetgreen 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 Deluxe with a short position of Sweetgreen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deluxe and Sweetgreen.
Diversification Opportunities for Deluxe and Sweetgreen
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Deluxe and Sweetgreen is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Deluxe and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen and Deluxe 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 Deluxe are associated (or correlated) with Sweetgreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweetgreen has no effect on the direction of Deluxe i.e., Deluxe and Sweetgreen go up and down completely randomly.
Pair Corralation between Deluxe and Sweetgreen
Considering the 90-day investment horizon Deluxe is expected to generate 0.63 times more return on investment than Sweetgreen. However, Deluxe is 1.59 times less risky than Sweetgreen. It trades about -0.14 of its potential returns per unit of risk. Sweetgreen is currently generating about -0.09 per unit of risk. If you would invest 1,584 in Deluxe on January 10, 2025 and sell it today you would lose (155.00) from holding Deluxe or give up 9.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deluxe vs. Sweetgreen
Performance |
| Timeline |
| Deluxe |
| Sweetgreen |
Deluxe and Sweetgreen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deluxe and Sweetgreen
The main advantage of trading using opposite Deluxe and Sweetgreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deluxe position performs unexpectedly, Sweetgreen 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 Sweetgreen will offset losses from the drop in Sweetgreen's long position.| Deluxe vs. Criteo Sa | Deluxe vs. Emerald Expositions Events | Deluxe vs. Marchex | Deluxe vs. Integral Ad Science |
| Sweetgreen vs. Cannae Holdings | Sweetgreen vs. Brinker International | Sweetgreen vs. Jack In The | Sweetgreen vs. Biglari Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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