Correlation Between Sweetgreen and ALPHABET

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Can any of the company-specific risk be diversified away by investing in both Sweetgreen and ALPHABET 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 ALPHABET into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sweetgreen and ALPHABET INC, you can compare the effects of market volatilities on Sweetgreen and ALPHABET 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 ALPHABET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sweetgreen and ALPHABET.

Diversification Opportunities for Sweetgreen and ALPHABET

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Sweetgreen and ALPHABET is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and ALPHABET INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPHABET 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 ALPHABET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPHABET INC has no effect on the direction of Sweetgreen i.e., Sweetgreen and ALPHABET go up and down completely randomly.

Pair Corralation between Sweetgreen and ALPHABET

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 3.81 times more return on investment than ALPHABET. However, Sweetgreen is 3.81 times more volatile than ALPHABET INC. It trades about 0.07 of its potential returns per unit of risk. ALPHABET INC is currently generating about 0.01 per unit of risk. If you would invest  872.00  in Sweetgreen on November 19, 2024 and sell it today you would earn a total of  1,847  from holding Sweetgreen or generate 211.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.6%
ValuesDaily Returns

Sweetgreen  vs.  ALPHABET INC

 Performance 
       Timeline  
Sweetgreen 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Sweetgreen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
ALPHABET INC 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in ALPHABET INC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, ALPHABET may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Sweetgreen and ALPHABET Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sweetgreen and ALPHABET

The main advantage of trading using opposite Sweetgreen and ALPHABET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweetgreen position performs unexpectedly, ALPHABET 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 ALPHABET will offset losses from the drop in ALPHABET's long position.
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The idea behind Sweetgreen and ALPHABET INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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