Correlation Between BOSTON BEER and FEMALE HEALTH
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and FEMALE HEALTH 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 FEMALE HEALTH 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 FEMALE HEALTH, you can compare the effects of market volatilities on BOSTON BEER and FEMALE HEALTH 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 FEMALE HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and FEMALE HEALTH.
Diversification Opportunities for BOSTON BEER and FEMALE HEALTH
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BOSTON and FEMALE is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and FEMALE HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEMALE HEALTH 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 FEMALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEMALE HEALTH has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and FEMALE HEALTH go up and down completely randomly.
Pair Corralation between BOSTON BEER and FEMALE HEALTH
Assuming the 90 days trading horizon BOSTON BEER A is expected to generate 0.32 times more return on investment than FEMALE HEALTH. However, BOSTON BEER A is 3.08 times less risky than FEMALE HEALTH. It trades about -0.02 of its potential returns per unit of risk. FEMALE HEALTH is currently generating about -0.03 per unit of risk. If you would invest 31,430 in BOSTON BEER A on October 19, 2024 and sell it today you would lose (6,750) from holding BOSTON BEER A or give up 21.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOSTON BEER A vs. FEMALE HEALTH
Performance |
| Timeline |
| BOSTON BEER A |
| FEMALE HEALTH |
BOSTON BEER and FEMALE HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and FEMALE HEALTH
The main advantage of trading using opposite BOSTON BEER and FEMALE HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, FEMALE HEALTH 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 FEMALE HEALTH will offset losses from the drop in FEMALE HEALTH's long position.| BOSTON BEER vs. ECHO INVESTMENT ZY | BOSTON BEER vs. SEI INVESTMENTS | BOSTON BEER vs. New Residential Investment | BOSTON BEER vs. Costco Wholesale Corp |
| FEMALE HEALTH vs. BOSTON BEER A | FEMALE HEALTH vs. Cass Information Systems | FEMALE HEALTH vs. MICRONIC MYDATA | FEMALE HEALTH vs. SAN MIGUEL BREWERY |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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