Correlation Between Starbucks and Femasys
Can any of the company-specific risk be diversified away by investing in both Starbucks and Femasys 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 Femasys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbucks and Femasys, you can compare the effects of market volatilities on Starbucks and Femasys 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 Femasys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and Femasys.
Diversification Opportunities for Starbucks and Femasys
Poor diversification
The 3 months correlation between Starbucks and Femasys is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Femasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Femasys 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 Femasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Femasys has no effect on the direction of Starbucks i.e., Starbucks and Femasys go up and down completely randomly.
Pair Corralation between Starbucks and Femasys
Given the investment horizon of 90 days Starbucks is expected to generate 3.03 times less return on investment than Femasys. But when comparing it to its historical volatility, Starbucks is 2.83 times less risky than Femasys. It trades about 0.33 of its potential returns per unit of risk. Femasys is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 109.00 in Femasys on November 28, 2024 and sell it today you would earn a total of 49.00 from holding Femasys or generate 44.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Starbucks vs. Femasys
Performance |
| Timeline |
| Starbucks |
| Femasys |
Starbucks and Femasys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Starbucks and Femasys
The main advantage of trading using opposite Starbucks and Femasys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks position performs unexpectedly, Femasys 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 Femasys will offset losses from the drop in Femasys' long position.| Starbucks vs. Chipotle Mexican Grill | Starbucks vs. Dominos Pizza Common | Starbucks vs. Yum Brands | Starbucks vs. The Wendys Co |
| Femasys vs. Precision Optics, | Femasys vs. Repro Med Systems | Femasys vs. InfuSystems Holdings | Femasys vs. Utah Medical Products |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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