Correlation Between Sweetgreen and Transgene

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

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

Diversification Opportunities for Sweetgreen and Transgene

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Correlation Coefficient

Sweetgreen  Transgene

Pay attention - limited upside

The 3 months correlation between Sweetgreen and Transgene is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Transgene SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transgene SA 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 Transgene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transgene SA has no effect on the direction of Sweetgreen i.e., Sweetgreen and Transgene go up and down completely randomly.

Pair Corralation between Sweetgreen and Transgene

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 5.51 times less return on investment than Transgene. But when comparing it to its historical volatility, Sweetgreen is 9.47 times less risky than Transgene. It trades about 0.08 of its potential returns per unit of risk. Transgene SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Transgene SA on October 11, 2024 and sell it today you would earn a total of  158.00  from holding Transgene SA or generate 15800.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sweetgreen  vs.  Transgene SA

Sweetgreen

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Sweetgreen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Transgene SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transgene SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Transgene is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sweetgreen and Transgene

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

The idea behind Sweetgreen and Transgene SA 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.