Correlation Between BOSTON BEER and Far East
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and Far East 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 Far East 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 Far East Horizon, you can compare the effects of market volatilities on BOSTON BEER and Far East 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 Far East. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Far East.
Diversification Opportunities for BOSTON BEER and Far East
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between BOSTON and Far is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Far East Horizon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far East Horizon 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 Far East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far East Horizon has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Far East go up and down completely randomly.
Pair Corralation between BOSTON BEER and Far East
Assuming the 90 days trading horizon BOSTON BEER A is expected to under-perform the Far East. But the stock apears to be less risky and, when comparing its historical volatility, BOSTON BEER A is 2.66 times less risky than Far East. The stock trades about -0.01 of its potential returns per unit of risk. The Far East Horizon is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Far East Horizon on October 13, 2024 and sell it today you would earn a total of 21.00 from holding Far East Horizon or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
BOSTON BEER A vs. Far East Horizon
Performance |
| Timeline |
| BOSTON BEER A |
| Far East Horizon |
BOSTON BEER and Far East Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and Far East
The main advantage of trading using opposite BOSTON BEER and Far East positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, Far East 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 Far East will offset losses from the drop in Far East's long position.| BOSTON BEER vs. Ameriprise Financial | BOSTON BEER vs. Sun Life Financial | BOSTON BEER vs. Synchrony Financial | BOSTON BEER vs. SYSTEMAIR AB |
| Far East vs. WisdomTree Investments | Far East vs. Virtus Investment Partners | Far East vs. BOSTON BEER A | Far East vs. China Resources Beer |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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