Correlation Between Sweetgreen and Big Lots

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

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

Diversification Opportunities for Sweetgreen and Big Lots

-0.52

Correlation Coefficient

Sweetgreen  Big Lots

Excellent diversification

The 3 months correlation between Sweetgreen and Big is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and Big Lots in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Lots 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 Big Lots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Lots has no effect on the direction of Sweetgreen i.e., Sweetgreen and Big Lots go up and down completely randomly.

Pair Corralation between Sweetgreen and Big Lots

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 1.03 times more return on investment than Big Lots. However, Sweetgreen is 1.03 times more volatile than Big Lots. It trades about 0.27 of its potential returns per unit of risk. Big Lots is currently generating about -0.03 per unit of risk. If you would invest  1,123  in Sweetgreen on February 26, 2024 and sell it today you would earn a total of  2,129  from holding Sweetgreen or generate 189.58% 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.  Big Lots

Sweetgreen

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sweetgreen are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Sweetgreen reported solid returns over the last few months and may actually be approaching a breakup point.

Big Lots

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big Lots has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sweetgreen and Big Lots

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

The idea behind Sweetgreen and Big Lots 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.