Correlation Between Starbucks and GEN Restaurant
Can any of the company-specific risk be diversified away by investing in both Starbucks and GEN Restaurant 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 GEN Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbucks and GEN Restaurant Group,, you can compare the effects of market volatilities on Starbucks and GEN Restaurant 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 GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and GEN Restaurant.
Diversification Opportunities for Starbucks and GEN Restaurant
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Starbucks and GEN is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Starbucks i.e., Starbucks and GEN Restaurant go up and down completely randomly.
Pair Corralation between Starbucks and GEN Restaurant
Given the investment horizon of 90 days Starbucks is expected to generate 0.73 times more return on investment than GEN Restaurant. However, Starbucks is 1.38 times less risky than GEN Restaurant. It trades about 0.08 of its potential returns per unit of risk. GEN Restaurant Group, is currently generating about -0.04 per unit of risk. If you would invest 8,018 in Starbucks on September 3, 2024 and sell it today you would earn a total of 2,228 from holding Starbucks or generate 27.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Starbucks vs. GEN Restaurant Group,
Performance |
| Timeline |
| Starbucks |
| GEN Restaurant Group, |
Starbucks and GEN Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Starbucks and GEN Restaurant
The main advantage of trading using opposite Starbucks and GEN Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks position performs unexpectedly, GEN Restaurant 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 GEN Restaurant will offset losses from the drop in GEN Restaurant's long position.| Starbucks vs. Highway Holdings Limited | Starbucks vs. QCR Holdings | Starbucks vs. Partner Communications | Starbucks vs. Acumen Pharmaceuticals |
| GEN Restaurant vs. SL Green Realty | GEN Restaurant vs. Haverty Furniture Companies | GEN Restaurant vs. FiscalNote Holdings | GEN Restaurant vs. Cadence Design Systems |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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