Coffee going down - SBUX and DNKN makes a lot of money
Coffee going up - SBUX and DNKN forward earning statements becomes a false. And Traders will drive it down.
Commodity based Stocks and Sectors, DO NOT trade without looking at the commodity.
Good luck trading.
Also would be worthwhile to check and see how hedged each company is to the price of coffee. Taking a wild guess and assuming the market is pricing in, I would figure SBUX is less hedged thus the wider price movement in the face of declining coffee prices.
However, this strikes me as unlikely given the size of the company - they would have every incentive to manage input costs such that swings in a volatile commodity dont impact their financial statements.
Anyway, I ran a correlation of rolling quarterly returns between SBUX and KC1! its not a strong relationship negative but looks like the strength of the relationship is often negative.