Correlation Between BOSTON BEER and Gossan Resources
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and Gossan Resources 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 Gossan Resources 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 Gossan Resources, you can compare the effects of market volatilities on BOSTON BEER and Gossan Resources 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 Gossan Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Gossan Resources.
Diversification Opportunities for BOSTON BEER and Gossan Resources
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BOSTON and Gossan is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Gossan Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gossan Resources 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 Gossan Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gossan Resources has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Gossan Resources go up and down completely randomly.
Pair Corralation between BOSTON BEER and Gossan Resources
Assuming the 90 days trading horizon BOSTON BEER A is expected to under-perform the Gossan Resources. But the stock apears to be less risky and, when comparing its historical volatility, BOSTON BEER A is 26.42 times less risky than Gossan Resources. The stock trades about -0.33 of its potential returns per unit of risk. The Gossan Resources is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1.05 in Gossan Resources on October 30, 2024 and sell it today you would lose (0.65) from holding Gossan Resources or give up 61.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.37% |
| Values | Daily Returns |
BOSTON BEER A vs. Gossan Resources
Performance |
| Timeline |
| BOSTON BEER A |
| Gossan Resources |
BOSTON BEER and Gossan Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and Gossan Resources
The main advantage of trading using opposite BOSTON BEER and Gossan Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, Gossan Resources 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 Gossan Resources will offset losses from the drop in Gossan Resources' long position.| BOSTON BEER vs. CITY OFFICE REIT | BOSTON BEER vs. OFFICE DEPOT | BOSTON BEER vs. PLAY2CHILL SA ZY | BOSTON BEER vs. Universal Display |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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