Correlation Between Plum Acquisition and Sweetgreen

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

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

Diversification Opportunities for Plum Acquisition and Sweetgreen

-0.73

Correlation Coefficient

Plum Acquisition  Sweetgreen

Pay attention - limited upside

The 3 months correlation between Plum and Sweetgreen is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Plum Acquisition Corp and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen and Plum Acquisition 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 Plum Acquisition Corp 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 Plum Acquisition i.e., Plum Acquisition and Sweetgreen go up and down completely randomly.

Pair Corralation between Plum Acquisition and Sweetgreen

Assuming the 90 days horizon Plum Acquisition Corp is expected to under-perform the Sweetgreen. In addition to that, Plum Acquisition is 2.42 times more volatile than Sweetgreen. It trades about -0.2 of its total potential returns per unit of risk. Sweetgreen is currently generating about -0.09 per unit of volatility. If you would invest  3,313  in Sweetgreen on October 23, 2024 and sell it today you would lose (229.00) from holding Sweetgreen or give up 6.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	68.42%
Values	Daily Returns

Plum Acquisition Corp  vs.  Sweetgreen

Plum Acquisition Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Plum Acquisition Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward-looking indicators, Plum Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Sweetgreen

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Plum Acquisition and Sweetgreen

The main advantage of trading using opposite Plum Acquisition and Sweetgreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plum Acquisition 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 Plum Acquisition Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.