Correlation Between Sweetgreen and Minerals Technologies

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

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

Diversification Opportunities for Sweetgreen and Minerals Technologies

0.69

Correlation Coefficient

Sweetgreen  Minerals Technologies

Poor diversification

The 3 months correlation between Sweetgreen and Minerals is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of Sweetgreen i.e., Sweetgreen and Minerals Technologies go up and down completely randomly.

Pair Corralation between Sweetgreen and Minerals Technologies

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 2.12 times more return on investment than Minerals Technologies. However, Sweetgreen is 2.12 times more volatile than Minerals Technologies. It trades about 0.17 of its potential returns per unit of risk. Minerals Technologies is currently generating about 0.09 per unit of risk. If you would invest  2,927  in Sweetgreen on August 31, 2024 and sell it today you would earn a total of  1,316  from holding Sweetgreen or generate 44.96% return on investment over 90 days.

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

Sweetgreen  vs.  Minerals Technologies

Sweetgreen

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sweetgreen are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Sweetgreen reported solid returns over the last few months and may actually be approaching a breakup point.

Minerals Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Minerals Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Minerals Technologies may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Sweetgreen and Minerals Technologies

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

The idea behind Sweetgreen and Minerals Technologies 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.