Correlation Between Sweetgreen and South Jersey

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

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

Diversification Opportunities for Sweetgreen and South Jersey

-0.33

Correlation Coefficient

Sweetgreen  South Jersey

Very good diversification

The 3 months correlation between Sweetgreen and South is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and South Jersey Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Jersey Industries 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 South Jersey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Jersey Industries has no effect on the direction of Sweetgreen i.e., Sweetgreen and South Jersey go up and down completely randomly.

Pair Corralation between Sweetgreen and South Jersey

If you would invest  3,418  in Sweetgreen on September 18, 2024 and sell it today you would earn a total of  94.00  from holding Sweetgreen or generate 2.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Sweetgreen  vs.  South Jersey Industries

Sweetgreen

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sweetgreen are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Sweetgreen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

South Jersey Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days South Jersey Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, South Jersey is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sweetgreen and South Jersey

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

The idea behind Sweetgreen and South Jersey Industries 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.