Correlation Between Kontoor Brands and Starbucks
Can any of the company-specific risk be diversified away by investing in both Kontoor Brands 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 Kontoor Brands and Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kontoor Brands and Starbucks, you can compare the effects of market volatilities on Kontoor Brands 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 Kontoor Brands with a short position of Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kontoor Brands and Starbucks.
Diversification Opportunities for Kontoor Brands and Starbucks
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kontoor and Starbucks is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Kontoor Brands 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 Kontoor Brands 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 Kontoor Brands i.e., Kontoor Brands and Starbucks go up and down completely randomly.
Pair Corralation between Kontoor Brands and Starbucks
Considering the 90-day investment horizon Kontoor Brands is expected to generate 0.89 times more return on investment than Starbucks. However, Kontoor Brands is 1.12 times less risky than Starbucks. It trades about 0.12 of its potential returns per unit of risk. Starbucks is currently generating about 0.02 per unit of risk. If you would invest 5,488 in Kontoor Brands on September 4, 2024 and sell it today you would earn a total of 3,931 from holding Kontoor Brands or generate 71.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Kontoor Brands vs. Starbucks
Performance |
| Timeline |
| Kontoor Brands |
| Starbucks |
Kontoor Brands and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kontoor Brands and Starbucks
The main advantage of trading using opposite Kontoor Brands and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kontoor Brands 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.| Kontoor Brands vs. Vince Holding Corp | Kontoor Brands vs. Ermenegildo Zegna NV | Kontoor Brands vs. Columbia Sportswear | Kontoor Brands vs. Gildan Activewear |
| Starbucks vs. Hyatt Hotels | Starbucks vs. Smart Share Global | Starbucks vs. Sweetgreen | Starbucks vs. Wyndham Hotels Resorts |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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