Correlation Between Starbucks Corp and Citigroup

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

Diversification Opportunities for Starbucks Corp and Citigroup

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Starbucks and Citigroup is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks Corp and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup 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 Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Starbucks Corp i.e., Starbucks Corp and Citigroup go up and down completely randomly.

Pair Corralation between Starbucks Corp and Citigroup

Given the investment horizon of 90 days Starbucks Corp is expected to generate 2.2 times less return on investment than Citigroup. But when comparing it to its historical volatility, Starbucks Corp is 1.08 times less risky than Citigroup. It trades about 0.01 of its potential returns per unit of risk. Citigroup is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,140  in Citigroup on June 28, 2022 and sell it today you would earn a total of  286.00  from holding Citigroup or generate 6.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Starbucks Corp  vs.  Citigroup

 Performance (%) 
       Timeline  
Starbucks Corp 
Starbucks Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks Corp are ranked lower than 7 (%) 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

Citigroup 
Citigroup Performance
0 of 100
Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Citigroup is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Citigroup Price Channel

Starbucks Corp and Citigroup Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Starbucks Corp and Citigroup

The main advantage of trading using opposite Starbucks Corp and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks Corp position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.
Starbucks Corp vs. Kibush Capital Corp
The idea behind Starbucks Corp and Citigroup 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.
Citigroup vs. Kibush Capital Corp
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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