Correlation Between Starbucks and Best Buy
Can any of the company-specific risk be diversified away by investing in both Starbucks and Best Buy 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 Starbucks and Best Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbucks and Best Buy Co, you can compare the effects of market volatilities on Starbucks and Best Buy 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 Starbucks with a short position of Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and Best Buy.
Diversification Opportunities for Starbucks and Best Buy
Pay attention - limited upside
The 3 months correlation between Starbucks and Best is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and Starbucks 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 Starbucks are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Starbucks i.e., Starbucks and Best Buy go up and down completely randomly.
Pair Corralation between Starbucks and Best Buy
If you would invest (100.00) in Best Buy Co on February 14, 2024 and sell it today you would earn a total of 100.00 from holding Best Buy Co or generate -100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
Starbucks vs. Best Buy Co
Performance |
Timeline |
Starbucks |
Best Buy |
Starbucks and Best Buy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Starbucks and Best Buy
The main advantage of trading using opposite Starbucks and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.Starbucks vs. McEwen Mining | Starbucks vs. Martin Marietta Materials | Starbucks vs. Southern Copper | Starbucks vs. Micron Technology |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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