Correlation Between Sweetgreen and Expedia

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

By analyzing existing cross correlation between Sweetgreen and Expedia Group, you can compare the effects of market volatilities on Sweetgreen and Expedia 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 Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sweetgreen and Expedia.

Diversification Opportunities for Sweetgreen and Expedia

0.22

Correlation Coefficient

Sweetgreen  Expedia

Modest diversification

The 3 months correlation between Sweetgreen and Expedia is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group 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 Expedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expedia Group has no effect on the direction of Sweetgreen i.e., Sweetgreen and Expedia go up and down completely randomly.

Pair Corralation between Sweetgreen and Expedia

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 1.77 times less return on investment than Expedia. In addition to that, Sweetgreen is 2.4 times more volatile than Expedia Group. It trades about 0.04 of its total potential returns per unit of risk. Expedia Group is currently generating about 0.17 per unit of volatility. If you would invest  12,250  in Expedia Group on September 29, 2024 and sell it today you would earn a total of  6,361  from holding Expedia Group or generate 51.93% 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.  Expedia Group

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.

Expedia Group

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Expedia Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Expedia exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sweetgreen and Expedia

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

The idea behind Sweetgreen and Expedia Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.