Correlation Between Sweetgreen and Norwegian Cruise
Can any of the company-specific risk be diversified away by investing in both Sweetgreen and Norwegian Cruise 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 Norwegian Cruise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sweetgreen and Norwegian Cruise Line, you can compare the effects of market volatilities on Sweetgreen and Norwegian Cruise 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 Norwegian Cruise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sweetgreen and Norwegian Cruise.
Diversification Opportunities for Sweetgreen and Norwegian Cruise
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sweetgreen and Norwegian is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Norwegian Cruise Line in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Cruise Line 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 Norwegian Cruise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Cruise Line has no effect on the direction of Sweetgreen i.e., Sweetgreen and Norwegian Cruise go up and down completely randomly.
Pair Corralation between Sweetgreen and Norwegian Cruise
Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 1.87 times more return on investment than Norwegian Cruise. However, Sweetgreen is 1.87 times more volatile than Norwegian Cruise Line. It trades about 0.12 of its potential returns per unit of risk. Norwegian Cruise Line is currently generating about 0.21 per unit of risk. If you would invest 3,851 in Sweetgreen on August 30, 2024 and sell it today you would earn a total of 392.00 from holding Sweetgreen or generate 10.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sweetgreen vs. Norwegian Cruise Line
Performance |
| Timeline |
| Sweetgreen |
| Norwegian Cruise Line |
Sweetgreen and Norwegian Cruise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sweetgreen and Norwegian Cruise
The main advantage of trading using opposite Sweetgreen and Norwegian Cruise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweetgreen position performs unexpectedly, Norwegian Cruise 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 Norwegian Cruise will offset losses from the drop in Norwegian Cruise's long position.| Sweetgreen vs. Chipotle Mexican Grill | Sweetgreen vs. Yum Brands | Sweetgreen vs. The Wendys Co | Sweetgreen vs. McDonalds |
| Norwegian Cruise vs. Carnival | Norwegian Cruise vs. Airbnb Inc | Norwegian Cruise vs. Expedia Group | Norwegian Cruise 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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