Correlation Between Precision Drilling and Sweetgreen
Can any of the company-specific risk be diversified away by investing in both Precision Drilling 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 Precision Drilling and Sweetgreen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precision Drilling and Sweetgreen, you can compare the effects of market volatilities on Precision Drilling 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 Precision Drilling with a short position of Sweetgreen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and Sweetgreen.
Diversification Opportunities for Precision Drilling and Sweetgreen
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Precision and Sweetgreen is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen and Precision Drilling 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 Precision Drilling 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 Precision Drilling i.e., Precision Drilling and Sweetgreen go up and down completely randomly.
Pair Corralation between Precision Drilling and Sweetgreen
Considering the 90-day investment horizon Precision Drilling is expected to generate 1.25 times less return on investment than Sweetgreen. But when comparing it to its historical volatility, Precision Drilling is 1.77 times less risky than Sweetgreen. It trades about 0.16 of its potential returns per unit of risk. Sweetgreen is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,851 in Sweetgreen on August 30, 2024 and sell it today you would earn a total of 392.00 from holding Sweetgreen or generate 10.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precision Drilling vs. Sweetgreen
Performance |
| Timeline |
| Precision Drilling |
| Sweetgreen |
Precision Drilling and Sweetgreen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precision Drilling and Sweetgreen
The main advantage of trading using opposite Precision Drilling and Sweetgreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling 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.| Precision Drilling vs. Helmerich and Payne | Precision Drilling vs. Nabors Industries | Precision Drilling vs. Seadrill Limited | Precision Drilling vs. Patterson UTI Energy |
| Sweetgreen vs. Chipotle Mexican Grill | Sweetgreen vs. Yum Brands | Sweetgreen vs. The Wendys Co | Sweetgreen vs. McDonalds |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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