Correlation Between Playtika Holding and Starbucks

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

Diversification Opportunities for Playtika Holding and Starbucks

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Playtika and Starbucks is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Playtika Holding 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 Playtika Holding Corp 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 Playtika Holding i.e., Playtika Holding and Starbucks go up and down completely randomly.

Pair Corralation between Playtika Holding and Starbucks

Given the investment horizon of 90 days Playtika Holding Corp is expected to generate 1.15 times more return on investment than Starbucks. However, Playtika Holding is 1.15 times more volatile than Starbucks. It trades about 0.15 of its potential returns per unit of risk. Starbucks is currently generating about 0.13 per unit of risk. If you would invest  734.00  in Playtika Holding Corp on September 1, 2024 and sell it today you would earn a total of  108.00  from holding Playtika Holding Corp or generate 14.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Playtika Holding Corp  vs.  Starbucks

 Performance 
       Timeline  
Playtika Holding Corp 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Playtika Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.
Starbucks 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Starbucks may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Playtika Holding and Starbucks Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Playtika Holding and Starbucks

The main advantage of trading using opposite Playtika Holding and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtika Holding 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 Playtika Holding Corp 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.
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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