Correlation Between LG Display and Starbucks
Can any of the company-specific risk be diversified away by investing in both LG Display 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 LG Display and Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display Co and Starbucks, you can compare the effects of market volatilities on LG Display 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 LG Display with a short position of Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Starbucks.
Diversification Opportunities for LG Display and Starbucks
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LGA and Starbucks is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and LG Display 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 LG Display Co 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 LG Display i.e., LG Display and Starbucks go up and down completely randomly.
Pair Corralation between LG Display and Starbucks
Assuming the 90 days horizon LG Display Co is expected to under-perform the Starbucks. In addition to that, LG Display is 1.29 times more volatile than Starbucks. It trades about -0.02 of its total potential returns per unit of risk. Starbucks is currently generating about 0.02 per unit of volatility. If you would invest 9,082 in Starbucks on September 5, 2024 and sell it today you would earn a total of 616.00 from holding Starbucks or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
LG Display Co vs. Starbucks
Performance |
| Timeline |
| LG Display |
| Starbucks |
LG Display and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Starbucks
The main advantage of trading using opposite LG Display and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display 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.| LG Display vs. Sumitomo Rubber Industries | LG Display vs. Materialise NV | LG Display vs. ADRIATIC METALS LS 013355 | LG Display vs. British American Tobacco |
| Starbucks vs. McDonalds | Starbucks vs. Chipotle Mexican Grill | Starbucks vs. Superior Plus Corp | Starbucks vs. NMI 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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