Correlation Between Sweetgreen and Acadia Healthcare

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Can any of the company-specific risk be diversified away by investing in both Sweetgreen and Acadia Healthcare 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 Acadia Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sweetgreen and Acadia Healthcare, you can compare the effects of market volatilities on Sweetgreen and Acadia Healthcare 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 Acadia Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sweetgreen and Acadia Healthcare.

Diversification Opportunities for Sweetgreen and Acadia Healthcare

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Sweetgreen and Acadia is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Acadia Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Healthcare 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 Acadia Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Healthcare has no effect on the direction of Sweetgreen i.e., Sweetgreen and Acadia Healthcare go up and down completely randomly.

Pair Corralation between Sweetgreen and Acadia Healthcare

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 4.16 times more return on investment than Acadia Healthcare. However, Sweetgreen is 4.16 times more volatile than Acadia Healthcare. It trades about 0.56 of its potential returns per unit of risk. Acadia Healthcare is currently generating about -0.27 per unit of risk. If you would invest  1,203  in Sweetgreen on December 29, 2023 and sell it today you would earn a total of  1,345  from holding Sweetgreen or generate 111.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Sweetgreen  vs.  Acadia Healthcare

 Performance 
       Timeline  
Sweetgreen 

Risk-Adjusted Performance

22 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Sweetgreen are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Sweetgreen reported solid returns over the last few months and may actually be approaching a breakup point.
Acadia Healthcare 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Acadia Healthcare are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Acadia Healthcare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sweetgreen and Acadia Healthcare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sweetgreen and Acadia Healthcare

The main advantage of trading using opposite Sweetgreen and Acadia Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweetgreen position performs unexpectedly, Acadia Healthcare 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 Acadia Healthcare will offset losses from the drop in Acadia Healthcare's long position.
The idea behind Sweetgreen and Acadia Healthcare 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.
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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