Correlation Between Harmony Gold and Starbucks
Can any of the company-specific risk be diversified away by investing in both Harmony Gold 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 Harmony Gold and Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harmony Gold Mining and Starbucks, you can compare the effects of market volatilities on Harmony Gold 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 Harmony Gold with a short position of Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Starbucks.
Diversification Opportunities for Harmony Gold and Starbucks
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Harmony and Starbucks is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Harmony Gold 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 Harmony Gold Mining 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 Harmony Gold i.e., Harmony Gold and Starbucks go up and down completely randomly.
Pair Corralation between Harmony Gold and Starbucks
Assuming the 90 days horizon Harmony Gold is expected to generate 1.08 times less return on investment than Starbucks. In addition to that, Harmony Gold is 1.69 times more volatile than Starbucks. It trades about 0.22 of its total potential returns per unit of risk. Starbucks is currently generating about 0.41 per unit of volatility. If you would invest 9,217 in Starbucks on November 3, 2024 and sell it today you would earn a total of 1,551 from holding Starbucks or generate 16.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Starbucks
Performance |
| Timeline |
| Harmony Gold Mining |
| Starbucks |
Harmony Gold and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Starbucks
The main advantage of trading using opposite Harmony Gold and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold 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.| Harmony Gold vs. Fernhill Beverage | Harmony Gold vs. Bridgford Foods | Harmony Gold vs. Grocery Outlet Holding | Harmony Gold vs. Romana Food Brands |
| Starbucks vs. Chipotle Mexican Grill | Starbucks vs. Dominos Pizza Common | 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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