Correlation Between Starbucks and MRV Engenharia

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

By analyzing existing cross correlation between Starbucks and MRV Engenharia e, you can compare the effects of market volatilities on Starbucks and MRV Engenharia 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 MRV Engenharia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and MRV Engenharia.

Diversification Opportunities for Starbucks and MRV Engenharia

-0.85

Correlation Coefficient

Starbucks  MRV Engenharia

Pay attention - limited upside

The 3 months correlation between Starbucks and MRV is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and MRV Engenharia e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRV Engenharia e 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 MRV Engenharia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRV Engenharia e has no effect on the direction of Starbucks i.e., Starbucks and MRV Engenharia go up and down completely randomly.

Pair Corralation between Starbucks and MRV Engenharia

Assuming the 90 days trading horizon Starbucks is expected to generate 0.49 times more return on investment than MRV Engenharia. However, Starbucks is 2.04 times less risky than MRV Engenharia. It trades about 0.16 of its potential returns per unit of risk. MRV Engenharia e is currently generating about -0.14 per unit of risk. If you would invest  52,484  in Starbucks on September 3, 2024 and sell it today you would earn a total of  8,254  from holding Starbucks or generate 15.73% return on investment over 90 days.

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

Starbucks  vs.  MRV Engenharia e

Starbucks

Risk-Adjusted Performance

12 of 100

Good

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

MRV Engenharia e

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MRV Engenharia e has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Starbucks and MRV Engenharia

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

The idea behind Starbucks and MRV Engenharia e 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.