Correlation Between Sweetgreen and Carbon Revolution

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

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

Diversification Opportunities for Sweetgreen and Carbon Revolution

-0.58

Correlation Coefficient

Sweetgreen  Carbon Revolution

Excellent diversification

The 3 months correlation between Sweetgreen and Carbon is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Carbon Revolution Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbon Revolution Public and Sweetgreen 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 Sweetgreen are associated (or correlated) with Carbon Revolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbon Revolution Public has no effect on the direction of Sweetgreen i.e., Sweetgreen and Carbon Revolution go up and down completely randomly.

Pair Corralation between Sweetgreen and Carbon Revolution

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 188.87 times less return on investment than Carbon Revolution. But when comparing it to its historical volatility, Sweetgreen is 4.62 times less risky than Carbon Revolution. It trades about 0.0 of its potential returns per unit of risk. Carbon Revolution Public is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  433.00  in Carbon Revolution Public on October 6, 2024 and sell it today you would earn a total of  217.00  from holding Carbon Revolution Public or generate 50.12% return on investment over 90 days.

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

Sweetgreen  vs.  Carbon Revolution Public

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Carbon Revolution Public

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carbon Revolution Public are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Carbon Revolution showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sweetgreen and Carbon Revolution

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

The idea behind Sweetgreen and Carbon Revolution Public 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.