Correlation Between BOSTON BEER and Broadwind
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and Broadwind 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 Broadwind 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 Broadwind, you can compare the effects of market volatilities on BOSTON BEER and Broadwind 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 Broadwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Broadwind.
Diversification Opportunities for BOSTON BEER and Broadwind
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BOSTON and Broadwind is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Broadwind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadwind 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 Broadwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadwind has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Broadwind go up and down completely randomly.
Pair Corralation between BOSTON BEER and Broadwind
Assuming the 90 days trading horizon BOSTON BEER A is expected to generate 0.44 times more return on investment than Broadwind. However, BOSTON BEER A is 2.28 times less risky than Broadwind. It trades about 0.16 of its potential returns per unit of risk. Broadwind is currently generating about -0.02 per unit of risk. If you would invest 24,480 in BOSTON BEER A on September 2, 2024 and sell it today you would earn a total of 4,500 from holding BOSTON BEER A or generate 18.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOSTON BEER A vs. Broadwind
Performance |
| Timeline |
| BOSTON BEER A |
| Broadwind |
BOSTON BEER and Broadwind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and Broadwind
The main advantage of trading using opposite BOSTON BEER and Broadwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, Broadwind 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 Broadwind will offset losses from the drop in Broadwind's long position.| BOSTON BEER vs. SIVERS SEMICONDUCTORS AB | BOSTON BEER vs. Darden Restaurants | BOSTON BEER vs. Reliance Steel Aluminum | BOSTON BEER vs. Q2M Managementberatung AG |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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