Correlation Between Via Renewables and STARBUCKS

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

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

Diversification Opportunities for Via Renewables and STARBUCKS

0.19

Correlation Coefficient

Via Renewables  STARBUCKS

Average diversification

The 3 months correlation between Via and STARBUCKS is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and STARBUCKS PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STARBUCKS PORATION and Via Renewables 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 Via Renewables 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 PORATION has no effect on the direction of Via Renewables i.e., Via Renewables and STARBUCKS go up and down completely randomly.

Pair Corralation between Via Renewables and STARBUCKS

Assuming the 90 days horizon Via Renewables is expected to under-perform the STARBUCKS. In addition to that, Via Renewables is 4.16 times more volatile than STARBUCKS PORATION. It trades about -0.03 of its total potential returns per unit of risk. STARBUCKS PORATION is currently generating about -0.01 per unit of volatility. If you would invest  9,060  in STARBUCKS PORATION on July 19, 2024 and sell it today you would lose (8.00) from holding STARBUCKS PORATION or give up 0.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.3%
Values	Daily Returns

Via Renewables  vs.  STARBUCKS PORATION

Via Renewables

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables may actually be approaching a critical reversion point that can send shares even higher in November 2024.

STARBUCKS PORATION

Risk-Adjusted Performance

15 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in STARBUCKS PORATION are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, STARBUCKS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Via Renewables and STARBUCKS

The main advantage of trading using opposite Via Renewables and STARBUCKS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Via Renewables 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's long position.

The idea behind Via Renewables and STARBUCKS PORATION 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.