Correlation Between Sweetgreen and TPT Strategic

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

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

Diversification Opportunities for Sweetgreen and TPT Strategic

-0.71

Correlation Coefficient

Sweetgreen  TPT Strategic

Pay attention - limited upside

The 3 months correlation between Sweetgreen and TPT is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and TPT Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPT Strategic 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 TPT Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPT Strategic has no effect on the direction of Sweetgreen i.e., Sweetgreen and TPT Strategic go up and down completely randomly.

Pair Corralation between Sweetgreen and TPT Strategic

Allowing for the 90-day total investment horizon Sweetgreen is expected to under-perform the TPT Strategic. In addition to that, Sweetgreen is 6.8 times more volatile than TPT Strategic. It trades about -0.12 of its total potential returns per unit of risk. TPT Strategic is currently generating about -0.22 per unit of volatility. If you would invest  924.00  in TPT Strategic on October 26, 2024 and sell it today you would lose (24.00) from holding TPT Strategic or give up 2.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Sweetgreen  vs.  TPT Strategic

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.

TPT Strategic

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TPT Strategic are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, TPT Strategic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sweetgreen and TPT Strategic

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

The idea behind Sweetgreen and TPT Strategic 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.