Correlation Between Sweetgreen and Travel Leisure

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

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

Diversification Opportunities for Sweetgreen and Travel Leisure

0.72

Correlation Coefficient

Sweetgreen  Travel Leisure

Poor diversification

The 3 months correlation between Sweetgreen and Travel is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Travel Leisure Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travel Leisure 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 Travel Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travel Leisure has no effect on the direction of Sweetgreen i.e., Sweetgreen and Travel Leisure go up and down completely randomly.

Pair Corralation between Sweetgreen and Travel Leisure

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 1.16 times less return on investment than Travel Leisure. In addition to that, Sweetgreen is 2.93 times more volatile than Travel Leisure Co. It trades about 0.11 of its total potential returns per unit of risk. Travel Leisure Co is currently generating about 0.36 per unit of volatility. If you would invest  4,920  in Travel Leisure Co on August 31, 2024 and sell it today you would earn a total of  667.00  from holding Travel Leisure Co or generate 13.56% return on investment over 90 days.

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

Sweetgreen  vs.  Travel Leisure Co

Sweetgreen

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sweetgreen are ranked lower than 13 (%) 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.

Travel Leisure

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Travel Leisure Co are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Travel Leisure disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sweetgreen and Travel Leisure

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

The idea behind Sweetgreen and Travel Leisure Co 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.