Correlation Between Starbucks and Cleanaway Waste

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

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

Diversification Opportunities for Starbucks and Cleanaway Waste

-0.08

Correlation Coefficient

Starbucks  Cleanaway Waste

Good diversification

The 3 months correlation between Starbucks and Cleanaway is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Cleanaway Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway Waste Mana 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 Cleanaway Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway Waste Mana has no effect on the direction of Starbucks i.e., Starbucks and Cleanaway Waste go up and down completely randomly.

Pair Corralation between Starbucks and Cleanaway Waste

Given the investment horizon of 90 days Starbucks is expected to under-perform the Cleanaway Waste. But the stock apears to be less risky and, when comparing its historical volatility, Starbucks is 1.17 times less risky than Cleanaway Waste. The stock trades about -0.22 of its potential returns per unit of risk. The Cleanaway Waste Management is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  189.00  in Cleanaway Waste Management on February 6, 2024 and sell it today you would lose (20.00) from holding Cleanaway Waste Management or give up 10.58% of portfolio value over 90 days.

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

Starbucks  vs.  Cleanaway Waste Management

Starbucks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Starbucks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Cleanaway Waste Mana

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cleanaway Waste Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Cleanaway Waste is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Starbucks and Cleanaway Waste

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

The idea behind Starbucks and Cleanaway Waste Management 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.