Correlation Between Accel Entertainment and Starbucks

Can any of the company-specific risk be diversified away by investing in both Accel Entertainment 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 Accel Entertainment and Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Accel Entertainment and Starbucks, you can compare the effects of market volatilities on Accel Entertainment 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 Accel Entertainment with a short position of Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accel Entertainment and Starbucks.

Diversification Opportunities for Accel Entertainment and Starbucks

0.33

Correlation Coefficient

Accel Entertainment  Starbucks

Weak diversification

The 3 months correlation between Accel and Starbucks is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Accel Entertainment and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Accel Entertainment 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 Accel Entertainment 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 Accel Entertainment i.e., Accel Entertainment and Starbucks go up and down completely randomly.

Pair Corralation between Accel Entertainment and Starbucks

Given the investment horizon of 90 days Accel Entertainment is expected to generate 1.23 times more return on investment than Starbucks. However, Accel Entertainment is 1.23 times more volatile than Starbucks. It trades about 0.04 of its potential returns per unit of risk. Starbucks is currently generating about 0.01 per unit of risk. If you would invest  1,165  in Accel Entertainment on September 13, 2024 and sell it today you would earn a total of  35.00  from holding Accel Entertainment or generate 3.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Accel Entertainment  vs.  Starbucks

Accel Entertainment

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Accel Entertainment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Accel Entertainment is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Starbucks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Starbucks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Starbucks is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Accel Entertainment and Starbucks

The main advantage of trading using opposite Accel Entertainment and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accel Entertainment 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.

The idea behind Accel Entertainment and Starbucks 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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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.