Correlation Between Starbucks and DraftKings
Can any of the company-specific risk be diversified away by investing in both Starbucks and DraftKings 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 DraftKings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbucks and DraftKings, you can compare the effects of market volatilities on Starbucks and DraftKings 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 DraftKings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and DraftKings.
Diversification Opportunities for Starbucks and DraftKings
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Starbucks and DraftKings is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and DraftKings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DraftKings 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 DraftKings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DraftKings has no effect on the direction of Starbucks i.e., Starbucks and DraftKings go up and down completely randomly.
Pair Corralation between Starbucks and DraftKings
Given the investment horizon of 90 days Starbucks is expected to generate 1.25 times more return on investment than DraftKings. However, Starbucks is 1.25 times more volatile than DraftKings. It trades about 0.1 of its potential returns per unit of risk. DraftKings is currently generating about -0.02 per unit of risk. If you would invest 7,943 in Starbucks on June 21, 2024 and sell it today you would earn a total of 1,747 from holding Starbucks or generate 21.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Starbucks vs. DraftKings
Performance |
Timeline |
Starbucks |
DraftKings |
Starbucks and DraftKings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Starbucks and DraftKings
The main advantage of trading using opposite Starbucks and DraftKings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks position performs unexpectedly, DraftKings 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 DraftKings will offset losses from the drop in DraftKings' long position.Starbucks vs. Chipotle Mexican Grill | Starbucks vs. Dominos Pizza | Starbucks vs. Yum Brands | Starbucks vs. The Wendys Co |
DraftKings vs. Light Wonder | DraftKings vs. International Game Technology | DraftKings vs. Everi Holdings | DraftKings vs. PlayAGS |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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