Correlation Between BOSTON BEER and United Breweries
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and United Breweries 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 United Breweries 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 United Breweries Co, you can compare the effects of market volatilities on BOSTON BEER and United Breweries 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 United Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and United Breweries.
Diversification Opportunities for BOSTON BEER and United Breweries
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BOSTON and United is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and United Breweries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries 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 United Breweries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Breweries has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and United Breweries go up and down completely randomly.
Pair Corralation between BOSTON BEER and United Breweries
Assuming the 90 days trading horizon BOSTON BEER A is expected to generate 1.08 times more return on investment than United Breweries. However, BOSTON BEER is 1.08 times more volatile than United Breweries Co. It trades about 0.0 of its potential returns per unit of risk. United Breweries Co is currently generating about -0.03 per unit of risk. If you would invest 30,750 in BOSTON BEER A on September 1, 2024 and sell it today you would lose (1,770) from holding BOSTON BEER A or give up 5.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOSTON BEER A vs. United Breweries Co
Performance |
| Timeline |
| BOSTON BEER A |
| United Breweries |
BOSTON BEER and United Breweries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and United Breweries
The main advantage of trading using opposite BOSTON BEER and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, United Breweries 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 United Breweries will offset losses from the drop in United Breweries' long position.| BOSTON BEER vs. PARKEN Sport Entertainment | BOSTON BEER vs. PLAYSTUDIOS A DL 0001 | BOSTON BEER vs. CNVISION MEDIA | BOSTON BEER vs. TOWNSQUARE MEDIA INC |
| United Breweries vs. TYSON FOODS A | United Breweries vs. Austevoll Seafood ASA | United Breweries vs. FUTURE GAMING GRP | United Breweries vs. THAI BEVERAGE |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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