Correlation Between Sweetgreen and MACYS

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

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

Diversification Opportunities for Sweetgreen and MACYS

0.21

Correlation Coefficient

Sweetgreen  MACYS

Modest diversification

The 3 months correlation between Sweetgreen and MACYS is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and MACYS RETAIL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACYS RETAIL HLDGS 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 MACYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACYS RETAIL HLDGS has no effect on the direction of Sweetgreen i.e., Sweetgreen and MACYS go up and down completely randomly.

Pair Corralation between Sweetgreen and MACYS

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 3.25 times more return on investment than MACYS. However, Sweetgreen is 3.25 times more volatile than MACYS RETAIL HLDGS. It trades about 0.09 of its potential returns per unit of risk. MACYS RETAIL HLDGS is currently generating about 0.01 per unit of risk. If you would invest  726.00  in Sweetgreen on October 5, 2024 and sell it today you would earn a total of  2,483  from holding Sweetgreen or generate 342.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.29%
Values	Daily Returns

Sweetgreen  vs.  MACYS RETAIL HLDGS

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 nearly stable technical and fundamental indicators, Sweetgreen is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

MACYS RETAIL HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MACYS RETAIL HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MACYS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sweetgreen and MACYS

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

The idea behind Sweetgreen and MACYS RETAIL HLDGS 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.