Correlation Between BOSTON BEER and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and Hyatt Hotels 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 BOSTON BEER and Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BOSTON BEER A and Hyatt Hotels, you can compare the effects of market volatilities on BOSTON BEER and Hyatt Hotels 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 BOSTON BEER with a short position of Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Hyatt Hotels.
Diversification Opportunities for BOSTON BEER and Hyatt Hotels
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BOSTON and Hyatt is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and BOSTON BEER 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 BOSTON BEER A are associated (or correlated) with Hyatt Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyatt Hotels has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Hyatt Hotels go up and down completely randomly.
Pair Corralation between BOSTON BEER and Hyatt Hotels
Assuming the 90 days trading horizon BOSTON BEER is expected to generate 1.26 times less return on investment than Hyatt Hotels. But when comparing it to its historical volatility, BOSTON BEER A is 1.12 times less risky than Hyatt Hotels. It trades about 0.08 of its potential returns per unit of risk. Hyatt Hotels is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 14,115 in Hyatt Hotels on September 20, 2024 and sell it today you would earn a total of 1,005 from holding Hyatt Hotels or generate 7.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOSTON BEER A vs. Hyatt Hotels
Performance |
| Timeline |
| BOSTON BEER A |
| Hyatt Hotels |
BOSTON BEER and Hyatt Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and Hyatt Hotels
The main advantage of trading using opposite BOSTON BEER and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, Hyatt Hotels 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 Hyatt Hotels will offset losses from the drop in Hyatt Hotels' long position.| BOSTON BEER vs. Apple Inc | BOSTON BEER vs. Apple Inc | BOSTON BEER vs. Apple Inc | BOSTON BEER vs. Microsoft |
| Hyatt Hotels vs. Compagnie Plastic Omnium | Hyatt Hotels vs. BOSTON BEER A | Hyatt Hotels vs. The Boston Beer | Hyatt Hotels vs. Monster Beverage 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 the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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