Correlation Between BOSTON BEER and Gap
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and Gap 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 Gap 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 The Gap, you can compare the effects of market volatilities on BOSTON BEER and Gap 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 Gap. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Gap.
Diversification Opportunities for BOSTON BEER and Gap
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between BOSTON and Gap is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and The Gap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap 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 Gap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Gap go up and down completely randomly.
Pair Corralation between BOSTON BEER and Gap
Assuming the 90 days trading horizon BOSTON BEER A is expected to under-perform the Gap. But the stock apears to be less risky and, when comparing its historical volatility, BOSTON BEER A is 1.19 times less risky than Gap. The stock trades about -0.45 of its potential returns per unit of risk. The The Gap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,275 in The Gap on November 2, 2024 and sell it today you would earn a total of 85.00 from holding The Gap or generate 3.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
BOSTON BEER A vs. The Gap
Performance |
| Timeline |
| BOSTON BEER A |
| Gap |
BOSTON BEER and Gap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and Gap
The main advantage of trading using opposite BOSTON BEER and Gap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, Gap 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 Gap will offset losses from the drop in Gap's long position.| BOSTON BEER vs. MidCap Financial Investment | BOSTON BEER vs. INTERCONT HOTELS | BOSTON BEER vs. NH HOTEL GROUP | BOSTON BEER vs. Playa Hotels Resorts |
| Gap vs. Monument Mining Limited | Gap vs. GALENA MINING LTD | Gap vs. AIR LIQUIDE ADR | Gap vs. Aya Gold Silver |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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