Correlation Between Whirlpool and Starbucks
Can any of the company-specific risk be diversified away by investing in both Whirlpool 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 Whirlpool and Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whirlpool and Starbucks, you can compare the effects of market volatilities on Whirlpool 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 Whirlpool with a short position of Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whirlpool and Starbucks.
Diversification Opportunities for Whirlpool and Starbucks
Good diversification
The 3 months correlation between Whirlpool and Starbucks is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Whirlpool 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 Whirlpool 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 has no effect on the direction of Whirlpool i.e., Whirlpool and Starbucks go up and down completely randomly.
Pair Corralation between Whirlpool and Starbucks
Considering the 90-day investment horizon Whirlpool is expected to under-perform the Starbucks. In addition to that, Whirlpool is 2.25 times more volatile than Starbucks. It trades about -0.15 of its total potential returns per unit of risk. Starbucks is currently generating about -0.14 per unit of volatility. If you would invest 9,067 in Starbucks on January 25, 2024 and sell it today you would lose (249.00) from holding Starbucks or give up 2.75% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Whirlpool vs. Starbucks
Performance |
Timeline |
Whirlpool |
Starbucks |
Whirlpool and Starbucks Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Whirlpool and Starbucks
The main advantage of trading using opposite Whirlpool and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whirlpool 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' long position.Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. Mohawk Industries | Whirlpool vs. Tempur Sealy International | Whirlpool vs. MillerKnoll |
Starbucks vs. Chipotle Mexican Grill | Starbucks vs. Dominos Pizza | Starbucks vs. Yum Brands | Starbucks vs. The Wendys Co |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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