Correlation Between Jack In and Starbucks

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

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

Diversification Opportunities for Jack In and Starbucks

0.64

Correlation Coefficient

Jack In  Starbucks

Poor diversification

The 3 months correlation between Jack and Starbucks is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Jack In The and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Jack In 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 Jack In The 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 Jack In i.e., Jack In and Starbucks go up and down completely randomly.

Pair Corralation between Jack In and Starbucks

Given the investment horizon of 90 days Jack In The is expected to under-perform the Starbucks. In addition to that, Jack In is 1.31 times more volatile than Starbucks. It trades about -0.16 of its total potential returns per unit of risk. Starbucks is currently generating about -0.03 per unit of volatility. If you would invest  9,257  in Starbucks on January 14, 2025 and sell it today you would lose (714.00) from holding Starbucks or give up 7.71% of portfolio value over 90 days.

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

Jack In The  vs.  Starbucks

Jack In

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jack In The has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Starbucks

Risk-Adjusted Performance

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 fairly strong basic indicators, Starbucks is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jack In and Starbucks

The main advantage of trading using opposite Jack In and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jack In 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 Jack In The 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.