Correlation Between Starbucks and Atreca

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

By analyzing existing cross correlation between Starbucks and Atreca Inc, you can compare the effects of market volatilities on Starbucks and Atreca 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 Atreca. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks and Atreca.

Diversification Opportunities for Starbucks and Atreca

0.54

Correlation Coefficient

Starbucks  Atreca

Very weak diversification

The 3 months correlation between Starbucks and Atreca is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Atreca Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atreca Inc 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 Atreca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atreca Inc has no effect on the direction of Starbucks i.e., Starbucks and Atreca go up and down completely randomly.

Pair Corralation between Starbucks and Atreca

Given the investment horizon of 90 days Starbucks is expected to under-perform the Atreca. But the stock apears to be less risky and, when comparing its historical volatility, Starbucks is 16.52 times less risky than Atreca. The stock trades about -0.31 of its potential returns per unit of risk. The Atreca Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  6.20  in Atreca Inc on January 20, 2024 and sell it today you would earn a total of  0.90  from holding Atreca Inc or generate 14.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	22.73%
Values	Daily Returns

Starbucks  vs.  Atreca Inc

Starbucks

Risk-Adjusted Performance

0 of 100

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 current stock price disturbance, may contribute to short-term losses for the investors.

Atreca Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atreca Inc 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 quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Starbucks and Atreca

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

The idea behind Starbucks and Atreca Inc 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.