Correlation Between Vienna Insurance and Starbucks

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

By analyzing existing cross correlation between Vienna Insurance Group and Starbucks, you can compare the effects of market volatilities on Vienna Insurance and Starbucks 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 Vienna Insurance with a short position of Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vienna Insurance and Starbucks.

Diversification Opportunities for Vienna Insurance and Starbucks

0.28

Correlation Coefficient

Vienna Insurance  Starbucks

Modest diversification

The 3 months correlation between Vienna and Starbucks is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vienna Insurance Group and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Vienna Insurance 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 Vienna Insurance Group are associated (or correlated) with Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Vienna Insurance i.e., Vienna Insurance and Starbucks go up and down completely randomly.

Pair Corralation between Vienna Insurance and Starbucks

Assuming the 90 days trading horizon Vienna Insurance Group is expected to generate 0.77 times more return on investment than Starbucks. However, Vienna Insurance Group is 1.3 times less risky than Starbucks. It trades about 0.33 of its potential returns per unit of risk. Starbucks is currently generating about 0.02 per unit of risk. If you would invest  3,000  in Vienna Insurance Group on December 24, 2024 and sell it today you would earn a total of  890.00  from holding Vienna Insurance Group or generate 29.67% return on investment over 90 days.

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

Vienna Insurance Group  vs.  Starbucks

Vienna Insurance

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vienna Insurance Group are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Vienna Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Starbucks

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Starbucks is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vienna Insurance and Starbucks

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

The idea behind Vienna Insurance Group and Starbucks 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.