Correlation Between Starbucks Corp and BG Foods

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

Diversification Opportunities for Starbucks Corp and BG Foods

-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between Starbucks and BG Foods is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks Corp and BG Foods Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods Holdings and Starbucks Corp 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 Corp are associated (or correlated) with BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods Holdings has no effect on the direction of Starbucks Corp i.e., Starbucks Corp and BG Foods go up and down completely randomly.

Pair Corralation between Starbucks Corp and BG Foods

Given the investment horizon of 90 days Starbucks Corp is expected to generate 0.92 times more return on investment than BG Foods. However, Starbucks Corp is 1.09 times less risky than BG Foods. It trades about -0.02 of its potential returns per unit of risk. BG Foods Holdings is currently generating about -0.48 per unit of risk. If you would invest  8,831  in Starbucks Corp on July 9, 2022 and sell it today you would lose (131.00)  from holding Starbucks Corp or give up 1.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Starbucks Corp  vs.  BG Foods Holdings

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

Starbucks Price Channel

BG Foods Holdings 
BG Foods Performance
0 of 100
Over the last 90 days BG Foods Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in November 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

BG Foods Price Channel

Starbucks Corp and BG Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Starbucks Corp and BG Foods

The main advantage of trading using opposite Starbucks Corp and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks Corp position performs unexpectedly, BG Foods 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 BG Foods will offset losses from the drop in BG Foods' long position.
Starbucks Corp vs. Amazon Inc
The idea behind Starbucks Corp and BG Foods Holdings 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.
BG Foods vs. Amazon Inc
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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