Correlation Between Starbucks and Entegris

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

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

Diversification Opportunities for Starbucks and Entegris

-0.22

Correlation Coefficient

Starbucks  Entegris

Very good diversification

The 3 months correlation between Starbucks and Entegris is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Entegris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entegris 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 Entegris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entegris has no effect on the direction of Starbucks i.e., Starbucks and Entegris go up and down completely randomly.

Pair Corralation between Starbucks and Entegris

Given the investment horizon of 90 days Starbucks is expected to generate 0.44 times more return on investment than Entegris. However, Starbucks is 2.28 times less risky than Entegris. It trades about 0.03 of its potential returns per unit of risk. Entegris is currently generating about -0.01 per unit of risk. If you would invest  9,572  in Starbucks on September 16, 2024 and sell it today you would earn a total of  170.00  from holding Starbucks or generate 1.78% return on investment over 90 days.

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

Starbucks  vs.  Entegris

Starbucks

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Entegris

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Starbucks and Entegris

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

The idea behind Starbucks and Entegris 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.