Correlation Between BOSTON BEER and Genesco
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and Genesco 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 Genesco 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 Genesco, you can compare the effects of market volatilities on BOSTON BEER and Genesco 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 Genesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Genesco.
Diversification Opportunities for BOSTON BEER and Genesco
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BOSTON and Genesco is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Genesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesco 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 Genesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesco has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Genesco go up and down completely randomly.
Pair Corralation between BOSTON BEER and Genesco
Assuming the 90 days trading horizon BOSTON BEER is expected to generate 3.88 times less return on investment than Genesco. But when comparing it to its historical volatility, BOSTON BEER A is 2.47 times less risky than Genesco. It trades about 0.27 of its potential returns per unit of risk. Genesco is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 2,260 in Genesco on September 5, 2024 and sell it today you would earn a total of 1,080 from holding Genesco or generate 47.79% 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. Genesco
Performance |
| Timeline |
| BOSTON BEER A |
| Genesco |
BOSTON BEER and Genesco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and Genesco
The main advantage of trading using opposite BOSTON BEER and Genesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, Genesco 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 Genesco will offset losses from the drop in Genesco's long position.| BOSTON BEER vs. BII Railway Transportation | BOSTON BEER vs. Fukuyama Transporting Co | BOSTON BEER vs. TEXAS ROADHOUSE | BOSTON BEER vs. Air Transport Services |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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