Correlation Between BOSTON BEER and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and CDN IMPERIAL 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 CDN IMPERIAL 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 CDN IMPERIAL BANK, you can compare the effects of market volatilities on BOSTON BEER and CDN IMPERIAL 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 CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and CDN IMPERIAL.
Diversification Opportunities for BOSTON BEER and CDN IMPERIAL
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BOSTON and CDN is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between BOSTON BEER and CDN IMPERIAL
Assuming the 90 days trading horizon BOSTON BEER A is expected to generate 1.49 times more return on investment than CDN IMPERIAL. However, BOSTON BEER is 1.49 times more volatile than CDN IMPERIAL BANK. It trades about 0.07 of its potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about -0.06 per unit of risk. If you would invest 20,800 in BOSTON BEER A on January 14, 2025 and sell it today you would earn a total of 740.00 from holding BOSTON BEER A or generate 3.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOSTON BEER A vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| BOSTON BEER A |
| CDN IMPERIAL BANK |
BOSTON BEER and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and CDN IMPERIAL
The main advantage of trading using opposite BOSTON BEER and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.| BOSTON BEER vs. UPDATE SOFTWARE | BOSTON BEER vs. PKSHA TECHNOLOGY INC | BOSTON BEER vs. MACOM Technology Solutions | BOSTON BEER vs. Check Point Software |
| CDN IMPERIAL vs. HANOVER INSURANCE | CDN IMPERIAL vs. VIENNA INSURANCE GR | CDN IMPERIAL vs. Vienna Insurance Group | CDN IMPERIAL vs. Stag Industrial |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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