Correlation Between Haemonetics and Starbucks

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

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

Diversification Opportunities for Haemonetics and Starbucks

0.55

Correlation Coefficient

Haemonetics  Starbucks

Very weak diversification

The 3 months correlation between Haemonetics and Starbucks is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Haemonetics and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Haemonetics 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 Haemonetics 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 Haemonetics i.e., Haemonetics and Starbucks go up and down completely randomly.

Pair Corralation between Haemonetics and Starbucks

Considering the 90-day investment horizon Haemonetics is expected to under-perform the Starbucks. But the stock apears to be less risky and, when comparing its historical volatility, Haemonetics is 1.05 times less risky than Starbucks. The stock trades about -0.01 of its potential returns per unit of risk. The Starbucks is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10,027  in Starbucks on October 11, 2024 and sell it today you would lose (767.00) from holding Starbucks or give up 7.65% of portfolio value over 90 days.

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

Haemonetics  vs.  Starbucks

Haemonetics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Haemonetics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Haemonetics is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Starbucks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Starbucks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Starbucks is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Haemonetics and Starbucks

The main advantage of trading using opposite Haemonetics and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haemonetics 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 Haemonetics 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.