Correlation Between BOSTON BEER and HEMISPHERE EGY
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and HEMISPHERE EGY 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 HEMISPHERE EGY 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 HEMISPHERE EGY, you can compare the effects of market volatilities on BOSTON BEER and HEMISPHERE EGY 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 HEMISPHERE EGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and HEMISPHERE EGY.
Diversification Opportunities for BOSTON BEER and HEMISPHERE EGY
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BOSTON and HEMISPHERE is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and HEMISPHERE EGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEMISPHERE EGY 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 HEMISPHERE EGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEMISPHERE EGY has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and HEMISPHERE EGY go up and down completely randomly.
Pair Corralation between BOSTON BEER and HEMISPHERE EGY
Assuming the 90 days trading horizon BOSTON BEER A is expected to generate 0.9 times more return on investment than HEMISPHERE EGY. However, BOSTON BEER A is 1.12 times less risky than HEMISPHERE EGY. It trades about 0.22 of its potential returns per unit of risk. HEMISPHERE EGY is currently generating about -0.01 per unit of risk. If you would invest 27,200 in BOSTON BEER A on August 29, 2024 and sell it today you would earn a total of 2,540 from holding BOSTON BEER A or generate 9.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOSTON BEER A vs. HEMISPHERE EGY
Performance |
| Timeline |
| BOSTON BEER A |
| HEMISPHERE EGY |
BOSTON BEER and HEMISPHERE EGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and HEMISPHERE EGY
The main advantage of trading using opposite BOSTON BEER and HEMISPHERE EGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, HEMISPHERE EGY 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 HEMISPHERE EGY will offset losses from the drop in HEMISPHERE EGY's long position.| BOSTON BEER vs. Apple Inc | BOSTON BEER vs. Apple Inc | BOSTON BEER vs. Superior Plus Corp | BOSTON BEER vs. SIVERS SEMICONDUCTORS AB |
| HEMISPHERE EGY vs. Apple Inc | HEMISPHERE EGY vs. Apple Inc | HEMISPHERE EGY vs. Superior Plus Corp | HEMISPHERE EGY vs. SIVERS SEMICONDUCTORS AB |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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