Correlation Between Starbucks and Kenvue
Can any of the company-specific risk be diversified away by investing in both Starbucks and Kenvue 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 Kenvue into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbucks and Kenvue Inc, you can compare the effects of market volatilities on Starbucks and Kenvue 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 Kenvue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and Kenvue.
Diversification Opportunities for Starbucks and Kenvue
Poor diversification
The 3 months correlation between Starbucks and Kenvue is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Kenvue Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenvue Inc 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 Kenvue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenvue Inc has no effect on the direction of Starbucks i.e., Starbucks and Kenvue go up and down completely randomly.
Pair Corralation between Starbucks and Kenvue
Given the investment horizon of 90 days Starbucks is expected to generate 0.89 times more return on investment than Kenvue. However, Starbucks is 1.12 times less risky than Kenvue. It trades about 0.19 of its potential returns per unit of risk. Kenvue Inc is currently generating about 0.09 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 514.00 from holding Starbucks or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Starbucks vs. Kenvue Inc
Performance |
| Timeline |
| Starbucks |
| Kenvue Inc |
Starbucks and Kenvue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Starbucks and Kenvue
The main advantage of trading using opposite Starbucks and Kenvue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks position performs unexpectedly, Kenvue 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 Kenvue will offset losses from the drop in Kenvue's long position.| Starbucks vs. Hyatt Hotels | Starbucks vs. Smart Share Global | Starbucks vs. Sweetgreen | Starbucks vs. Wyndham Hotels Resorts |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |