Correlation Between BOSTON BEER and LION ONE
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and LION ONE 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 LION ONE 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 LION ONE METALS, you can compare the effects of market volatilities on BOSTON BEER and LION ONE 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 LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and LION ONE.
Diversification Opportunities for BOSTON BEER and LION ONE
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between BOSTON and LION is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS 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 LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and LION ONE go up and down completely randomly.
Pair Corralation between BOSTON BEER and LION ONE
Assuming the 90 days trading horizon BOSTON BEER A is expected to generate 0.5 times more return on investment than LION ONE. However, BOSTON BEER A is 2.02 times less risky than LION ONE. It trades about 0.23 of its potential returns per unit of risk. LION ONE METALS is currently generating about -0.05 per unit of risk. If you would invest 26,740 in BOSTON BEER A on September 3, 2024 and sell it today you would earn a total of 2,240 from holding BOSTON BEER A or generate 8.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOSTON BEER A vs. LION ONE METALS
Performance |
| Timeline |
| BOSTON BEER A |
| LION ONE METALS |
BOSTON BEER and LION ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and LION ONE
The main advantage of trading using opposite BOSTON BEER and LION ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, LION ONE 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 LION ONE will offset losses from the drop in LION ONE's long position.| BOSTON BEER vs. China Resources Beer | BOSTON BEER vs. Tsingtao Brewery | BOSTON BEER vs. Molson Coors Beverage | BOSTON BEER vs. United Breweries Co |
| LION ONE vs. HomeToGo SE | LION ONE vs. NORTHEAST UTILITIES | LION ONE vs. SBM OFFSHORE | LION ONE vs. Zijin Mining Group |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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