Correlation Between Alfi and Starbucks Corp

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

Diversification Opportunities for Alfi and Starbucks Corp

0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between Alfi and Starbucks is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Alfi Inc and Starbucks Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks Corp and Alfi 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 Alfi Inc are associated (or correlated) with Starbucks Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks Corp has no effect on the direction of Alfi i.e., Alfi and Starbucks Corp go up and down completely randomly.

Pair Corralation between Alfi and Starbucks Corp

Considering the 90-day investment horizon Alfi Inc is expected to under-perform the Starbucks Corp. In addition to that, Alfi is 1.46 times more volatile than Starbucks Corp. It trades about -0.32 of its total potential returns per unit of risk. Starbucks Corp is currently generating about 0.01 per unit of volatility. If you would invest  8,406  in Starbucks Corp on June 27, 2022 and sell it today you would earn a total of  11.00  from holding Starbucks Corp or generate 0.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Alfi Inc  vs.  Starbucks Corp

 Performance (%) 
       Timeline  
Alfi Inc 
Alfi Performance
0 of 100
Over the last 90 days Alfi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in October 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Alfi Price Channel

Starbucks Corp 
Starbucks Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Starbucks Corp may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Starbucks Price Channel

Alfi and Starbucks Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alfi and Starbucks Corp

The main advantage of trading using opposite Alfi and Starbucks Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfi position performs unexpectedly, Starbucks Corp 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 Corp will offset losses from the drop in Starbucks Corp's long position.
Alfi vs. Industrias Bachoco SA
The idea behind Alfi Inc and Starbucks Corp 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.
Starbucks Corp vs. Industrias Bachoco SA
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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