Correlation Between Metro AG and BOSTON BEER
Can any of the company-specific risk be diversified away by investing in both Metro AG 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 Metro AG and BOSTON BEER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro AG and BOSTON BEER A , you can compare the effects of market volatilities on Metro AG 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 Metro AG with a short position of BOSTON BEER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro AG and BOSTON BEER.
Diversification Opportunities for Metro AG and BOSTON BEER
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Metro and BOSTON is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Metro AG 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 Metro AG 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 Metro AG 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 Metro AG i.e., Metro AG and BOSTON BEER go up and down completely randomly.
Pair Corralation between Metro AG and BOSTON BEER
Assuming the 90 days trading horizon Metro AG is expected to generate 91.25 times less return on investment than BOSTON BEER. But when comparing it to its historical volatility, Metro AG is 1.6 times less risky than BOSTON BEER. It trades about 0.01 of its potential returns per unit of risk. BOSTON BEER A is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 26,740 in BOSTON BEER A on September 4, 2024 and sell it today you would earn a total of 3,080 from holding BOSTON BEER A or generate 11.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro AG vs. BOSTON BEER A
Performance |
| Timeline |
| Metro AG |
| BOSTON BEER A |
Metro AG and BOSTON BEER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro AG and BOSTON BEER
The main advantage of trading using opposite Metro AG and BOSTON BEER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro AG 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.| Metro AG vs. SINGAPORE AIRLINES | Metro AG vs. CAREER EDUCATION | Metro AG vs. BJs Restaurants | Metro AG vs. American Airlines Group |
| BOSTON BEER vs. TOTAL GABON | BOSTON BEER vs. Walgreens Boots Alliance | BOSTON BEER vs. Peak Resources Limited |
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.
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