Correlation Between Sweetgreen and Airbnb
Can any of the company-specific risk be diversified away by investing in both Sweetgreen and Airbnb 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 Sweetgreen and Airbnb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sweetgreen and Airbnb Inc, you can compare the effects of market volatilities on Sweetgreen and Airbnb 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 Sweetgreen with a short position of Airbnb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sweetgreen and Airbnb.
Diversification Opportunities for Sweetgreen and Airbnb
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sweetgreen and Airbnb is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Airbnb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbnb Inc and Sweetgreen 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 Sweetgreen are associated (or correlated) with Airbnb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbnb Inc has no effect on the direction of Sweetgreen i.e., Sweetgreen and Airbnb go up and down completely randomly.
Pair Corralation between Sweetgreen and Airbnb
Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 1.79 times more return on investment than Airbnb. However, Sweetgreen is 1.79 times more volatile than Airbnb Inc. It trades about 0.13 of its potential returns per unit of risk. Airbnb Inc is currently generating about 0.03 per unit of risk. If you would invest 3,689 in Sweetgreen on August 24, 2024 and sell it today you would earn a total of 436.00 from holding Sweetgreen or generate 11.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sweetgreen vs. Airbnb Inc
Performance |
| Timeline |
| Sweetgreen |
| Airbnb Inc |
Sweetgreen and Airbnb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sweetgreen and Airbnb
The main advantage of trading using opposite Sweetgreen and Airbnb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweetgreen position performs unexpectedly, Airbnb 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 Airbnb will offset losses from the drop in Airbnb's long position.| Sweetgreen vs. Cannae Holdings | Sweetgreen vs. Brinker International | Sweetgreen vs. Jack In The | Sweetgreen vs. Biglari Holdings |
| Airbnb vs. Norwegian Cruise Line | Airbnb vs. Royal Caribbean Cruises | Airbnb vs. Expedia Group | Airbnb vs. Booking Holdings |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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