Correlation Between Cannae Holdings and Sweetgreen

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

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

Diversification Opportunities for Cannae Holdings and Sweetgreen

0.54

Correlation Coefficient

Cannae Holdings  Sweetgreen

Very weak diversification

The 3 months correlation between Cannae and Sweetgreen is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cannae Holdings and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen and Cannae Holdings 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 Cannae Holdings are associated (or correlated) with Sweetgreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweetgreen has no effect on the direction of Cannae Holdings i.e., Cannae Holdings and Sweetgreen go up and down completely randomly.

Pair Corralation between Cannae Holdings and Sweetgreen

Given the investment horizon of 90 days Cannae Holdings is expected to generate 2.94 times less return on investment than Sweetgreen. But when comparing it to its historical volatility, Cannae Holdings is 2.42 times less risky than Sweetgreen. It trades about 0.13 of its potential returns per unit of risk. Sweetgreen is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,927  in Sweetgreen on September 3, 2024 and sell it today you would earn a total of  1,171  from holding Sweetgreen or generate 40.01% return on investment over 90 days.

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

Cannae Holdings  vs.  Sweetgreen

Cannae Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cannae Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Cannae Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sweetgreen

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sweetgreen are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Sweetgreen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cannae Holdings and Sweetgreen

The main advantage of trading using opposite Cannae Holdings and Sweetgreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cannae Holdings position performs unexpectedly, Sweetgreen 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 Sweetgreen will offset losses from the drop in Sweetgreen's long position.

The idea behind Cannae Holdings and Sweetgreen 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.