Correlation Between Starbucks and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Starbucks and Harmony Gold 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 Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbucks and Harmony Gold Mining, you can compare the effects of market volatilities on Starbucks and Harmony Gold 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and Harmony Gold.
Diversification Opportunities for Starbucks and Harmony Gold
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Starbucks and Harmony is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Starbucks i.e., Starbucks and Harmony Gold go up and down completely randomly.
Pair Corralation between Starbucks and Harmony Gold
Given the investment horizon of 90 days Starbucks is expected to generate 0.59 times more return on investment than Harmony Gold. However, Starbucks is 1.69 times less risky than Harmony Gold. It trades about 0.41 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.22 per unit of risk. If you would invest 9,217 in Starbucks on November 3, 2024 and sell it today you would earn a total of 1,551 from holding Starbucks or generate 16.83% 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. Harmony Gold Mining
Performance |
| Timeline |
| Starbucks |
| Harmony Gold Mining |
Starbucks and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Starbucks and Harmony Gold
The main advantage of trading using opposite Starbucks and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| Starbucks vs. Chipotle Mexican Grill | Starbucks vs. Dominos Pizza Common | Starbucks vs. Yum Brands | Starbucks vs. The Wendys Co |
| Harmony Gold vs. Fernhill Beverage | Harmony Gold vs. Bridgford Foods | Harmony Gold vs. Grocery Outlet Holding | Harmony Gold vs. Romana Food Brands |
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 Stocks Directory module to find actively traded stocks across global markets.
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