Correlation Between Aristocrat Leisure and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Boston Beer 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 Aristocrat Leisure and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure Limited and The Boston Beer, you can compare the effects of market volatilities on Aristocrat Leisure and Boston Beer 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 Aristocrat Leisure with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Boston Beer.
Diversification Opportunities for Aristocrat Leisure and Boston Beer
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aristocrat and Boston is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and The Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Aristocrat Leisure 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 Aristocrat Leisure Limited are associated (or correlated) with Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Boston Beer go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Boston Beer
Assuming the 90 days horizon Aristocrat Leisure Limited is expected to generate 0.7 times more return on investment than Boston Beer. However, Aristocrat Leisure Limited is 1.44 times less risky than Boston Beer. It trades about -0.06 of its potential returns per unit of risk. The Boston Beer is currently generating about -0.58 per unit of risk. If you would invest 4,140 in Aristocrat Leisure Limited on October 28, 2024 and sell it today you would lose (60.00) from holding Aristocrat Leisure Limited or give up 1.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure Limited vs. The Boston Beer
Performance |
| Timeline |
| Aristocrat Leisure |
| Boston Beer |
Aristocrat Leisure and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Boston Beer
The main advantage of trading using opposite Aristocrat Leisure and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.| Aristocrat Leisure vs. VELA TECHNOLPLC LS 0001 | Aristocrat Leisure vs. Perdoceo Education | Aristocrat Leisure vs. PKSHA TECHNOLOGY INC | Aristocrat Leisure vs. ASPEN TECHINC DL |
| Boston Beer vs. H2O Retailing | Boston Beer vs. ADRIATIC METALS LS 013355 | Boston Beer vs. ARDAGH METAL PACDL 0001 | Boston Beer vs. Kaiser Aluminum |
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 the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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