Correlation Between Roblox Corp and Sweetgreen

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

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

Diversification Opportunities for Roblox Corp and Sweetgreen

-0.57

Correlation Coefficient

Roblox Corp  Sweetgreen

Excellent diversification

The 3 months correlation between Roblox and Sweetgreen is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Roblox Corp and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen and Roblox Corp 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 Roblox 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 Roblox Corp i.e., Roblox Corp and Sweetgreen go up and down completely randomly.

Pair Corralation between Roblox Corp and Sweetgreen

Given the investment horizon of 90 days Roblox Corp is expected to generate 1.84 times less return on investment than Sweetgreen. But when comparing it to its historical volatility, Roblox Corp is 1.39 times less risky than Sweetgreen. It trades about 0.05 of its potential returns per unit of risk. Sweetgreen is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,102  in Sweetgreen on October 27, 2024 and sell it today you would earn a total of  1,901  from holding Sweetgreen or generate 172.5% return on investment over 90 days.

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

Roblox Corp  vs.  Sweetgreen

Roblox Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Roblox Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Roblox Corp 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 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Roblox Corp and Sweetgreen

The main advantage of trading using opposite Roblox Corp and Sweetgreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roblox Corp 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 Roblox 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.

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.