Correlation Between Sweetgreen and Arcos Dorados
Can any of the company-specific risk be diversified away by investing in both Sweetgreen and Arcos Dorados 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 Arcos Dorados into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sweetgreen and Arcos Dorados Holdings, you can compare the effects of market volatilities on Sweetgreen and Arcos Dorados 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 Arcos Dorados. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sweetgreen and Arcos Dorados.
Diversification Opportunities for Sweetgreen and Arcos Dorados
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sweetgreen and Arcos is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Arcos Dorados Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcos Dorados Holdings 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 Arcos Dorados. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcos Dorados Holdings has no effect on the direction of Sweetgreen i.e., Sweetgreen and Arcos Dorados go up and down completely randomly.
Pair Corralation between Sweetgreen and Arcos Dorados
Allowing for the 90-day total investment horizon Sweetgreen is expected to under-perform the Arcos Dorados. In addition to that, Sweetgreen is 3.26 times more volatile than Arcos Dorados Holdings. It trades about -0.04 of its total potential returns per unit of risk. Arcos Dorados Holdings is currently generating about -0.11 per unit of volatility. If you would invest 833.00 in Arcos Dorados Holdings on September 12, 2024 and sell it today you would lose (34.00) from holding Arcos Dorados Holdings or give up 4.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sweetgreen vs. Arcos Dorados Holdings
Performance |
| Timeline |
| Sweetgreen |
| Arcos Dorados Holdings |
Sweetgreen and Arcos Dorados Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sweetgreen and Arcos Dorados
The main advantage of trading using opposite Sweetgreen and Arcos Dorados positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweetgreen position performs unexpectedly, Arcos Dorados 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 Arcos Dorados will offset losses from the drop in Arcos Dorados' long position.| Sweetgreen vs. Cannae Holdings | Sweetgreen vs. Brinker International | Sweetgreen vs. Jack In The | Sweetgreen vs. Biglari Holdings |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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