Correlation Between Starbucks and NSANY

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

By analyzing existing cross correlation between Starbucks and NSANY 481 17 SEP 30, you can compare the effects of market volatilities on Starbucks and NSANY 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 NSANY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and NSANY.

Diversification Opportunities for Starbucks and NSANY

0.21

Correlation Coefficient

Starbucks  NSANY

Modest diversification

The 3 months correlation between Starbucks and NSANY is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and NSANY 481 17 SEP 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSANY 481 17 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 NSANY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSANY 481 17 has no effect on the direction of Starbucks i.e., Starbucks and NSANY go up and down completely randomly.

Pair Corralation between Starbucks and NSANY

Given the investment horizon of 90 days Starbucks is expected to generate 2.16 times more return on investment than NSANY. However, Starbucks is 2.16 times more volatile than NSANY 481 17 SEP 30. It trades about 0.08 of its potential returns per unit of risk. NSANY 481 17 SEP 30 is currently generating about 0.03 per unit of risk. If you would invest  8,942  in Starbucks on December 24, 2024 and sell it today you would earn a total of  765.00  from holding Starbucks or generate 8.56% return on investment over 90 days.

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

Starbucks  vs.  NSANY 481 17 SEP 30

Starbucks

Risk-Adjusted Performance

OK

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.

NSANY 481 17

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NSANY 481 17 SEP 30 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NSANY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Starbucks and NSANY

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

The idea behind Starbucks and NSANY 481 17 SEP 30 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.