Correlation Between Marimaca Copper and Starbucks
Can any of the company-specific risk be diversified away by investing in both Marimaca Copper 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 Marimaca Copper and Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marimaca Copper Corp and Starbucks, you can compare the effects of market volatilities on Marimaca Copper 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 Marimaca Copper with a short position of Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marimaca Copper and Starbucks.
Diversification Opportunities for Marimaca Copper and Starbucks
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marimaca and Starbucks is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Marimaca Copper Corp and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Marimaca Copper 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 Marimaca Copper Corp 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 Marimaca Copper i.e., Marimaca Copper and Starbucks go up and down completely randomly.
Pair Corralation between Marimaca Copper and Starbucks
Assuming the 90 days horizon Marimaca Copper is expected to generate 3.11 times less return on investment than Starbucks. But when comparing it to its historical volatility, Marimaca Copper Corp is 1.01 times less risky than Starbucks. It trades about 0.13 of its potential returns per unit of risk. Starbucks is currently generating about 0.41 of returns per unit of risk over similar time horizon. 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marimaca Copper Corp vs. Starbucks
Performance |
| Timeline |
| Marimaca Copper Corp |
| Starbucks |
Marimaca Copper and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marimaca Copper and Starbucks
The main advantage of trading using opposite Marimaca Copper and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marimaca Copper 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.| Marimaca Copper vs. Freeport McMoran Copper Gold | Marimaca Copper vs. Antofagasta PLC | Marimaca Copper vs. First Quantum Minerals | Marimaca Copper vs. Jiangxi Copper |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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