Correlation Between Starbucks and Starbucks

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

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

Diversification Opportunities for Starbucks and Starbucks

0.99

Correlation Coefficient

Starbucks  Starbucks

No risk reduction

The 3 months correlation between Starbucks and Starbucks is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks 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 Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Starbucks i.e., Starbucks and Starbucks go up and down completely randomly.

Pair Corralation between Starbucks and Starbucks

Assuming the 90 days trading horizon Starbucks is expected to generate 1.07 times less return on investment than Starbucks. But when comparing it to its historical volatility, Starbucks is 1.05 times less risky than Starbucks. It trades about 0.14 of its potential returns per unit of risk. Starbucks is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  8,517  in Starbucks on August 30, 2024 and sell it today you would earn a total of  1,101  from holding Starbucks or generate 12.93% return on investment over 90 days.

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

Starbucks  vs.  Starbucks

Starbucks

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental drivers, Starbucks may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Starbucks

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Starbucks may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Starbucks and Starbucks

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

The idea behind Starbucks and Starbucks 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.