Correlation Between Sweetgreen and Carnival Plc

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

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

Diversification Opportunities for Sweetgreen and Carnival Plc

0.27

Correlation Coefficient

Sweetgreen  Carnival Plc

Modest diversification

The 3 months correlation between Sweetgreen and Carnival is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Carnival Plc ADS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival Plc ADS 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 Carnival Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival Plc ADS has no effect on the direction of Sweetgreen i.e., Sweetgreen and Carnival Plc go up and down completely randomly.

Pair Corralation between Sweetgreen and Carnival Plc

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 1.48 times less return on investment than Carnival Plc. In addition to that, Sweetgreen is 1.95 times more volatile than Carnival Plc ADS. It trades about 0.04 of its total potential returns per unit of risk. Carnival Plc ADS is currently generating about 0.11 per unit of volatility. If you would invest  1,628  in Carnival Plc ADS on September 28, 2024 and sell it today you would earn a total of  637.00  from holding Carnival Plc ADS or generate 39.13% return on investment over 90 days.

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

Sweetgreen  vs.  Carnival Plc ADS

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.

Carnival Plc ADS

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carnival Plc ADS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Carnival Plc disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sweetgreen and Carnival Plc

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

The idea behind Sweetgreen and Carnival Plc ADS 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.