Correlation Between Sweetgreen and Papa Johns

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

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

Diversification Opportunities for Sweetgreen and Papa Johns

0.19

Correlation Coefficient

Sweetgreen  Papa Johns

Average diversification

The 3 months correlation between Sweetgreen and Papa is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Papa Johns International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Papa Johns International and Sweetgreen 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 Sweetgreen are associated (or correlated) with Papa Johns. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Papa Johns International has no effect on the direction of Sweetgreen i.e., Sweetgreen and Papa Johns go up and down completely randomly.

Pair Corralation between Sweetgreen and Papa Johns

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 1.58 times more return on investment than Papa Johns. However, Sweetgreen is 1.58 times more volatile than Papa Johns International. It trades about 0.07 of its potential returns per unit of risk. Papa Johns International is currently generating about 0.0 per unit of risk. If you would invest  3,395  in Sweetgreen on September 12, 2024 and sell it today you would earn a total of  485.00  from holding Sweetgreen or generate 14.29% return on investment over 90 days.

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

Sweetgreen  vs.  Papa Johns International

Sweetgreen

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sweetgreen are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Sweetgreen reported solid returns over the last few months and may actually be approaching a breakup point.

Papa Johns International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Papa Johns International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Papa Johns is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sweetgreen and Papa Johns

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

The idea behind Sweetgreen and Papa Johns International 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.