Correlation Between Transocean and Sweetgreen

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

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

Diversification Opportunities for Transocean and Sweetgreen

0.21

Correlation Coefficient

Transocean  Sweetgreen

Modest diversification

The 3 months correlation between Transocean and Sweetgreen is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Transocean and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen and Transocean 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 Transocean 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 Transocean i.e., Transocean and Sweetgreen go up and down completely randomly.

Pair Corralation between Transocean and Sweetgreen

Considering the 90-day investment horizon Transocean is expected to generate 35.91 times less return on investment than Sweetgreen. But when comparing it to its historical volatility, Transocean is 1.47 times less risky than Sweetgreen. It trades about 0.0 of its potential returns per unit of risk. Sweetgreen is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  865.00  in Sweetgreen on September 24, 2024 and sell it today you would earn a total of  2,645  from holding Sweetgreen or generate 305.78% return on investment over 90 days.

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

Transocean  vs.  Sweetgreen

Transocean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transocean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sweetgreen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sweetgreen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Sweetgreen is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Transocean and Sweetgreen

The main advantage of trading using opposite Transocean and Sweetgreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transocean 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 Transocean 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.