Correlation Between Star Diamond and Starbucks

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

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

Diversification Opportunities for Star Diamond and Starbucks

0.0

Correlation Coefficient

Star Diamond  Starbucks

Pay attention - limited upside

The 3 months correlation between Star and Starbucks is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Star Diamond and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Star Diamond 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 Star Diamond 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 Star Diamond i.e., Star Diamond and Starbucks go up and down completely randomly.

Pair Corralation between Star Diamond and Starbucks

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	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Star Diamond  vs.  Starbucks

Star Diamond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Star Diamond has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Star Diamond is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Star Diamond and Starbucks

The main advantage of trading using opposite Star Diamond and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Diamond 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 Star Diamond 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..