Correlation Between Starbucks and Advanced Micro
Can any of the company-specific risk be diversified away by investing in both Starbucks and Advanced Micro 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 Starbucks and Advanced Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbucks and Advanced Micro Devices, you can compare the effects of market volatilities on Starbucks and Advanced Micro 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 Starbucks with a short position of Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and Advanced Micro.
Diversification Opportunities for Starbucks and Advanced Micro
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Starbucks and Advanced is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices and Starbucks 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 Starbucks are associated (or correlated) with Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Starbucks i.e., Starbucks and Advanced Micro go up and down completely randomly.
Pair Corralation between Starbucks and Advanced Micro
Given the investment horizon of 90 days Starbucks is expected to generate 0.68 times more return on investment than Advanced Micro. However, Starbucks is 1.47 times less risky than Advanced Micro. It trades about 0.16 of its potential returns per unit of risk. Advanced Micro Devices is currently generating about 0.06 per unit of risk. If you would invest 9,643 in Starbucks on September 5, 2024 and sell it today you would earn a total of 427.00 from holding Starbucks or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Starbucks vs. Advanced Micro Devices
Performance |
| Timeline |
| Starbucks |
| Advanced Micro Devices |
Starbucks and Advanced Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Starbucks and Advanced Micro
The main advantage of trading using opposite Starbucks and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks position performs unexpectedly, Advanced Micro 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 Advanced Micro will offset losses from the drop in Advanced Micro's long position.| Starbucks vs. Hyatt Hotels | Starbucks vs. Smart Share Global | Starbucks vs. Wyndham Hotels Resorts | Starbucks vs. WW International |
| Advanced Micro vs. NXP Semiconductors NV | Advanced Micro vs. Monolithic Power Systems | Advanced Micro vs. ON Semiconductor | Advanced Micro vs. GSI Technology |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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