Correlation Between Grupo Sports and Starbucks
Can any of the company-specific risk be diversified away by investing in both Grupo Sports and Starbucks 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 Grupo Sports and Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Sports World and Starbucks, you can compare the effects of market volatilities on Grupo Sports and Starbucks 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 Grupo Sports with a short position of Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Sports and Starbucks.
Diversification Opportunities for Grupo Sports and Starbucks
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grupo and Starbucks is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Sports World and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Grupo Sports 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 Grupo Sports World are associated (or correlated) with Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Grupo Sports i.e., Grupo Sports and Starbucks go up and down completely randomly.
Pair Corralation between Grupo Sports and Starbucks
Assuming the 90 days trading horizon Grupo Sports World is expected to generate 0.65 times more return on investment than Starbucks. However, Grupo Sports World is 1.54 times less risky than Starbucks. It trades about 0.14 of its potential returns per unit of risk. Starbucks is currently generating about 0.07 per unit of risk. If you would invest 418.00 in Grupo Sports World on September 1, 2024 and sell it today you would earn a total of 222.00 from holding Grupo Sports World or generate 53.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Sports World vs. Starbucks
Performance |
| Timeline |
| Grupo Sports World |
| Starbucks |
Grupo Sports and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Sports and Starbucks
The main advantage of trading using opposite Grupo Sports and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Sports position performs unexpectedly, Starbucks 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 Starbucks will offset losses from the drop in Starbucks' long position.| Grupo Sports vs. DXC Technology | Grupo Sports vs. Ross Stores | Grupo Sports vs. Prudential Financial | Grupo Sports vs. First Republic Bank |
| Starbucks vs. DXC Technology | Starbucks vs. FibraHotel | Starbucks vs. United States Steel | Starbucks vs. New Oriental Education |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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