Correlation Between Starbucks and Sea
Can any of the company-specific risk be diversified away by investing in both Starbucks and Sea 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 Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbucks and Sea, you can compare the effects of market volatilities on Starbucks and Sea 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 Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and Sea.
Diversification Opportunities for Starbucks and Sea
Poor diversification
The 3 months correlation between Starbucks and Sea is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of Starbucks i.e., Starbucks and Sea go up and down completely randomly.
Pair Corralation between Starbucks and Sea
Given the investment horizon of 90 days Starbucks is expected to generate 1.76 times less return on investment than Sea. In addition to that, Starbucks is 1.14 times more volatile than Sea. It trades about 0.08 of its total potential returns per unit of risk. Sea is currently generating about 0.17 per unit of volatility. If you would invest 7,113 in Sea on September 3, 2024 and sell it today you would earn a total of 4,267 from holding Sea or generate 59.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Starbucks vs. Sea
Performance |
| Timeline |
| Starbucks |
| Sea |
Starbucks and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Starbucks and Sea
The main advantage of trading using opposite Starbucks and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| Starbucks vs. Highway Holdings Limited | Starbucks vs. QCR Holdings | Starbucks vs. Partner Communications | Starbucks vs. Acumen Pharmaceuticals |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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