Correlation Between Sweetgreen and Funko

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

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

Diversification Opportunities for Sweetgreen and Funko

-0.6

Correlation Coefficient

Sweetgreen  Funko

Excellent diversification

The 3 months correlation between Sweetgreen and Funko is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc 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 Funko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Funko Inc has no effect on the direction of Sweetgreen i.e., Sweetgreen and Funko go up and down completely randomly.

Pair Corralation between Sweetgreen and Funko

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 1.27 times more return on investment than Funko. However, Sweetgreen is 1.27 times more volatile than Funko Inc. It trades about 0.07 of its potential returns per unit of risk. Funko Inc is currently generating about 0.02 per unit of risk. If you would invest  1,102  in Sweetgreen on October 27, 2024 and sell it today you would earn a total of  1,901  from holding Sweetgreen or generate 172.5% return on investment over 90 days.

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

Sweetgreen  vs.  Funko Inc

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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Funko Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward-looking signals, Funko displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sweetgreen and Funko

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

The idea behind Sweetgreen and Funko Inc 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.