Correlation Between BOSTON BEER and Metro AG
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and Metro AG 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 Metro AG 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 Metro AG, you can compare the effects of market volatilities on BOSTON BEER and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Metro AG.
Diversification Opportunities for BOSTON BEER and Metro AG
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BOSTON and Metro is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Metro AG go up and down completely randomly.
Pair Corralation between BOSTON BEER and Metro AG
Assuming the 90 days trading horizon BOSTON BEER A is expected to generate 0.61 times more return on investment than Metro AG. However, BOSTON BEER A is 1.65 times less risky than Metro AG. It trades about -0.03 of its potential returns per unit of risk. Metro AG is currently generating about -0.16 per unit of risk. If you would invest 29,160 in BOSTON BEER A on September 21, 2024 and sell it today you would lose (300.00) from holding BOSTON BEER A or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOSTON BEER A vs. Metro AG
Performance |
| Timeline |
| BOSTON BEER A |
| Metro AG |
BOSTON BEER and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and Metro AG
The main advantage of trading using opposite BOSTON BEER and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.The idea behind BOSTON BEER A and Metro AG 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.| Metro AG vs. SOFI TECHNOLOGIES | Metro AG vs. MOLSON RS BEVERAGE | Metro AG vs. BOSTON BEER A | Metro AG vs. SBM OFFSHORE |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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