Correlation Between Starbucks and Marstons PLC

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

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

Diversification Opportunities for Starbucks and Marstons PLC

0.32

Correlation Coefficient

Starbucks  Marstons PLC

Weak diversification

The 3 months correlation between Starbucks and Marstons is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Marstons PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marstons PLC and Starbucks 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 Starbucks are associated (or correlated) with Marstons PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marstons PLC has no effect on the direction of Starbucks i.e., Starbucks and Marstons PLC go up and down completely randomly.

Pair Corralation between Starbucks and Marstons PLC

Given the investment horizon of 90 days Starbucks is expected to generate 0.69 times more return on investment than Marstons PLC. However, Starbucks is 1.45 times less risky than Marstons PLC. It trades about 0.08 of its potential returns per unit of risk. Marstons PLC is currently generating about -0.1 per unit of risk. If you would invest  9,009  in Starbucks on December 30, 2024 and sell it today you would earn a total of  764.00  from holding Starbucks or generate 8.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Starbucks  vs.  Marstons PLC

Starbucks

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Starbucks may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Marstons PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marstons PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic 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 Starbucks and Marstons PLC

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

The idea behind Starbucks and Marstons PLC 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.