Correlation Between Starbucks and Coupang LLC
Can any of the company-specific risk be diversified away by investing in both Starbucks and Coupang LLC 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 Coupang LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbucks and Coupang LLC, you can compare the effects of market volatilities on Starbucks and Coupang LLC 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 Coupang LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and Coupang LLC.
Diversification Opportunities for Starbucks and Coupang LLC
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Starbucks and Coupang is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC 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 Coupang LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coupang LLC has no effect on the direction of Starbucks i.e., Starbucks and Coupang LLC go up and down completely randomly.
Pair Corralation between Starbucks and Coupang LLC
Given the investment horizon of 90 days Starbucks is expected to generate 0.4 times more return on investment than Coupang LLC. However, Starbucks is 2.48 times less risky than Coupang LLC. It trades about 0.19 of its potential returns per unit of risk. Coupang LLC is currently generating about -0.01 per unit of risk. If you would invest 9,710 in Starbucks on September 1, 2024 and sell it today you would earn a total of 536.00 from holding Starbucks or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Starbucks vs. Coupang LLC
Performance |
| Timeline |
| Starbucks |
| Coupang LLC |
Starbucks and Coupang LLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Starbucks and Coupang LLC
The main advantage of trading using opposite Starbucks and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks position performs unexpectedly, Coupang LLC 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 Coupang LLC will offset losses from the drop in Coupang LLC's long position.| Starbucks vs. Chipotle Mexican Grill | Starbucks vs. Dominos Pizza | Starbucks vs. Yum Brands | Starbucks vs. The Wendys Co |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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