Correlation Between Uber Technologies and Starbucks

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

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

Diversification Opportunities for Uber Technologies and Starbucks

-0.26

Correlation Coefficient

Uber Technologies  Starbucks

Very good diversification

The 3 months correlation between Uber and Starbucks is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Starbucks go up and down completely randomly.

Pair Corralation between Uber Technologies and Starbucks

Given the investment horizon of 90 days Uber Technologies is expected to generate 5.51 times less return on investment than Starbucks. In addition to that, Uber Technologies is 2.02 times more volatile than Starbucks. It trades about 0.01 of its total potential returns per unit of risk. Starbucks is currently generating about 0.14 per unit of volatility. If you would invest  9,100  in Starbucks on September 5, 2024 and sell it today you would earn a total of  1,057  from holding Starbucks or generate 11.62% return on investment over 90 days.

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

Uber Technologies  vs.  Starbucks

Uber Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Uber Technologies is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

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. In spite of fairly inconsistent basic indicators, Starbucks may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Uber Technologies and Starbucks

The main advantage of trading using opposite Uber Technologies and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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 Uber Technologies 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.

Check out your portfolio center.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.