Correlation Between Starbucks and Brenmiller Energy

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

Diversification Opportunities for Starbucks and Brenmiller Energy

-0.81
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Starbucks and Brenmiller is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Brenmiller Energy Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brenmiller Energy 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 Brenmiller Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brenmiller Energy has no effect on the direction of Starbucks i.e., Starbucks and Brenmiller Energy go up and down completely randomly.

Pair Corralation between Starbucks and Brenmiller Energy

Given the investment horizon of 90 days Starbucks is expected to generate 278.43 times less return on investment than Brenmiller Energy. But when comparing it to its historical volatility, Starbucks is 44.78 times less risky than Brenmiller Energy. It trades about 0.01 of its potential returns per unit of risk. Brenmiller Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Brenmiller Energy on September 10, 2022 and sell it today you would earn a total of  162.00  from holding Brenmiller Energy or generate 9.223372036854776E16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy27.97%
ValuesDaily Returns

Starbucks  vs.  Brenmiller Energy Ltd

 Performance (%) 
       Timeline  
Starbucks 
Starbucks Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Starbucks showed solid returns over the last few months and may actually be approaching a breakup point.

Starbucks Price Channel

Brenmiller Energy 
Brenmiller Performance
0 of 100
Over the last 90 days Brenmiller Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2023. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Brenmiller Price Channel

Starbucks and Brenmiller Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Starbucks and Brenmiller Energy

The main advantage of trading using opposite Starbucks and Brenmiller Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks position performs unexpectedly, Brenmiller Energy 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 Brenmiller Energy will offset losses from the drop in Brenmiller Energy's long position.
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The idea behind Starbucks and Brenmiller Energy 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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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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