Correlation Between Artisan Partners and Starbucks

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

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

Diversification Opportunities for Artisan Partners and Starbucks

0.47

Correlation Coefficient

Artisan Partners  Starbucks

Very weak diversification

The 3 months correlation between Artisan and Starbucks is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Partners Asset and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Artisan Partners 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 Artisan Partners Asset 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 Artisan Partners i.e., Artisan Partners and Starbucks go up and down completely randomly.

Pair Corralation between Artisan Partners and Starbucks

Given the investment horizon of 90 days Artisan Partners Asset is expected to under-perform the Starbucks. But the stock apears to be less risky and, when comparing its historical volatility, Artisan Partners Asset is 1.01 times less risky than Starbucks. The stock trades about -0.05 of its potential returns per unit of risk. The Starbucks is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9,009  in Starbucks on December 30, 2024 and sell it today you would earn a total of  764.00  from holding Starbucks or generate 8.48% return on investment over 90 days.

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

Artisan Partners Asset  vs.  Starbucks

Artisan Partners Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days Artisan Partners Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Artisan Partners is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Starbucks

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Starbucks may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Artisan Partners and Starbucks

The main advantage of trading using opposite Artisan Partners and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Artisan Partners 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 Artisan Partners Asset 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.