Correlation Between Sweetgreen and Entravision Communications
Can any of the company-specific risk be diversified away by investing in both Sweetgreen and Entravision Communications 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 Entravision Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sweetgreen and Entravision Communications, you can compare the effects of market volatilities on Sweetgreen and Entravision Communications 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 Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sweetgreen and Entravision Communications.
Diversification Opportunities for Sweetgreen and Entravision Communications
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sweetgreen and Entravision is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications 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 Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Sweetgreen i.e., Sweetgreen and Entravision Communications go up and down completely randomly.
Pair Corralation between Sweetgreen and Entravision Communications
Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 1.16 times more return on investment than Entravision Communications. However, Sweetgreen is 1.16 times more volatile than Entravision Communications. It trades about 0.13 of its potential returns per unit of risk. Entravision Communications is currently generating about -0.01 per unit of risk. If you would invest 1,080 in Sweetgreen on September 3, 2024 and sell it today you would earn a total of 3,018 from holding Sweetgreen or generate 279.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sweetgreen vs. Entravision Communications
Performance |
| Timeline |
| Sweetgreen |
| Entravision Communications |
Sweetgreen and Entravision Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sweetgreen and Entravision Communications
The main advantage of trading using opposite Sweetgreen and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweetgreen position performs unexpectedly, Entravision Communications 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 Entravision Communications will offset losses from the drop in Entravision Communications' long position.| Sweetgreen vs. Starbucks | Sweetgreen vs. Highway Holdings Limited | Sweetgreen vs. QCR Holdings | Sweetgreen vs. Partner Communications |
| Entravision Communications vs. Marchex | Entravision Communications vs. Direct Digital Holdings | Entravision Communications vs. Cimpress NV | Entravision Communications vs. Townsquare Media |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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