Correlation Between Sweetgreen and Standard

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

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

Diversification Opportunities for Sweetgreen and Standard

-0.55

Correlation Coefficient

Sweetgreen  Standard

Excellent diversification

The 3 months correlation between Sweetgreen and Standard is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Standard Motor Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Motor Products and Sweetgreen 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 Sweetgreen are associated (or correlated) with Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Motor Products has no effect on the direction of Sweetgreen i.e., Sweetgreen and Standard go up and down completely randomly.

Pair Corralation between Sweetgreen and Standard

Allowing for the 90-day total investment horizon Sweetgreen is expected to under-perform the Standard. In addition to that, Sweetgreen is 2.64 times more volatile than Standard Motor Products. It trades about -0.13 of its total potential returns per unit of risk. Standard Motor Products is currently generating about 0.08 per unit of volatility. If you would invest  2,781  in Standard Motor Products on May 5, 2025 and sell it today you would earn a total of  262.00  from holding Standard Motor Products or generate 9.42% return on investment over 90 days.

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

Sweetgreen  vs.  Standard Motor Products

Sweetgreen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sweetgreen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Standard Motor Products

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Motor Products are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating primary indicators, Standard may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Sweetgreen and Standard

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

The idea behind Sweetgreen and Standard Motor Products 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.