Correlation Between Apple and BOSTON BEER

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and BOSTON BEER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and BOSTON BEER A , you can compare the effects of market volatilities on Apple 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 Apple with a short position of BOSTON BEER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and BOSTON BEER.

Diversification Opportunities for Apple and BOSTON BEER

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Apple and BOSTON is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and BOSTON BEER A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOSTON BEER A and Apple 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 Apple Inc 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 A has no effect on the direction of Apple i.e., Apple and BOSTON BEER go up and down completely randomly.

Pair Corralation between Apple and BOSTON BEER

Assuming the 90 days trading horizon Apple is expected to generate 2.43 times less return on investment than BOSTON BEER. But when comparing it to its historical volatility, Apple Inc is 1.35 times less risky than BOSTON BEER. It trades about 0.09 of its potential returns per unit of risk. BOSTON BEER A is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  25,020  in BOSTON BEER A on August 28, 2024 and sell it today you would earn a total of  4,660  from holding BOSTON BEER A or generate 18.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  BOSTON BEER A

 Performance 
       Timeline  
Apple Inc 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in December 2024.
BOSTON BEER A 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in BOSTON BEER A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, BOSTON BEER exhibited solid returns over the last few months and may actually be approaching a breakup point.

Apple and BOSTON BEER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and BOSTON BEER

The main advantage of trading using opposite Apple and BOSTON BEER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.
The idea behind Apple Inc and BOSTON BEER A 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.
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

Other Complementary Tools

Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format