Correlation Between Bt Brands and Sweetgreen

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

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

Diversification Opportunities for Bt Brands and Sweetgreen

0.2

Correlation Coefficient

Bt Brands  Sweetgreen

Modest diversification

The 3 months correlation between BTBD and Sweetgreen is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen and Bt Brands 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 Bt Brands are associated (or correlated) with Sweetgreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweetgreen has no effect on the direction of Bt Brands i.e., Bt Brands and Sweetgreen go up and down completely randomly.

Pair Corralation between Bt Brands and Sweetgreen

Given the investment horizon of 90 days Bt Brands is expected to generate 1.58 times more return on investment than Sweetgreen. However, Bt Brands is 1.58 times more volatile than Sweetgreen. It trades about -0.01 of its potential returns per unit of risk. Sweetgreen is currently generating about -0.07 per unit of risk. If you would invest  157.00  in Bt Brands on December 28, 2024 and sell it today you would lose (24.00) from holding Bt Brands or give up 15.29% of portfolio value over 90 days.

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

Bt Brands  vs.  Sweetgreen

Bt Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bt Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Bt Brands is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Sweetgreen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sweetgreen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bt Brands and Sweetgreen

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

The idea behind Bt Brands and Sweetgreen 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.