Correlation Between Starbucks and Africa Israel
Can any of the company-specific risk be diversified away by investing in both Starbucks and Africa Israel 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 Africa Israel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbucks and Africa Israel Residences, you can compare the effects of market volatilities on Starbucks and Africa Israel 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 Africa Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and Africa Israel.
Diversification Opportunities for Starbucks and Africa Israel
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Starbucks and Africa is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Africa Israel Residences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Africa Israel Residences 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 Africa Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Africa Israel Residences has no effect on the direction of Starbucks i.e., Starbucks and Africa Israel go up and down completely randomly.
Pair Corralation between Starbucks and Africa Israel
Given the investment horizon of 90 days Starbucks is expected to generate 1.27 times less return on investment than Africa Israel. But when comparing it to its historical volatility, Starbucks is 1.74 times less risky than Africa Israel. It trades about 0.03 of its potential returns per unit of risk. Africa Israel Residences is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,976,877 in Africa Israel Residences on January 20, 2024 and sell it today you would earn a total of 192,123 from holding Africa Israel Residences or generate 9.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 79.19% |
| Values | Daily Returns |
Starbucks vs. Africa Israel Residences
Performance |
| Timeline |
| Starbucks |
| Africa Israel Residences |
Starbucks and Africa Israel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Starbucks and Africa Israel
The main advantage of trading using opposite Starbucks and Africa Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks position performs unexpectedly, Africa Israel 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 Africa Israel will offset losses from the drop in Africa Israel's long position.| Starbucks vs. Chipotle Mexican Grill | Starbucks vs. Dominos Pizza | Starbucks vs. Yum Brands | Starbucks vs. The Wendys Co |
| Africa Israel vs. Migdal Insurance | Africa Israel vs. The Phoenix Holdings | Africa Israel vs. Harel Insurance Investments | Africa Israel vs. Clal Insurance Enterprises |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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