Correlation Between Starbucks and VARIOUS EATERIES
Can any of the company-specific risk be diversified away by investing in both Starbucks and VARIOUS EATERIES 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 Starbucks and VARIOUS EATERIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbucks and VARIOUS EATERIES LS, you can compare the effects of market volatilities on Starbucks and VARIOUS EATERIES 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 Starbucks with a short position of VARIOUS EATERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and VARIOUS EATERIES.
Diversification Opportunities for Starbucks and VARIOUS EATERIES
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Starbucks and VARIOUS is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and VARIOUS EATERIES LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VARIOUS EATERIES and Starbucks 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 Starbucks are associated (or correlated) with VARIOUS EATERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VARIOUS EATERIES has no effect on the direction of Starbucks i.e., Starbucks and VARIOUS EATERIES go up and down completely randomly.
Pair Corralation between Starbucks and VARIOUS EATERIES
Assuming the 90 days trading horizon Starbucks is expected to generate 1.87 times more return on investment than VARIOUS EATERIES. However, Starbucks is 1.87 times more volatile than VARIOUS EATERIES LS. It trades about 0.12 of its potential returns per unit of risk. VARIOUS EATERIES LS is currently generating about -0.06 per unit of risk. If you would invest 6,827 in Starbucks on October 26, 2024 and sell it today you would earn a total of 2,545 from holding Starbucks or generate 37.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Starbucks vs. VARIOUS EATERIES LS
Performance |
| Timeline |
| Starbucks |
| VARIOUS EATERIES |
Starbucks and VARIOUS EATERIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Starbucks and VARIOUS EATERIES
The main advantage of trading using opposite Starbucks and VARIOUS EATERIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks position performs unexpectedly, VARIOUS EATERIES 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 VARIOUS EATERIES will offset losses from the drop in VARIOUS EATERIES's long position.| Starbucks vs. Tokyu Construction Co | Starbucks vs. DXC Technology Co | Starbucks vs. Micron Technology | Starbucks vs. Daito Trust Construction |
| VARIOUS EATERIES vs. McDonalds | VARIOUS EATERIES vs. Starbucks | VARIOUS EATERIES vs. Chipotle Mexican Grill | VARIOUS EATERIES vs. Compass Group PLC |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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