Correlation Between BOSTON BEER and TOTAL GABON
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and TOTAL GABON 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 TOTAL GABON 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 TOTAL GABON, you can compare the effects of market volatilities on BOSTON BEER and TOTAL GABON 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 TOTAL GABON. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and TOTAL GABON.
Diversification Opportunities for BOSTON BEER and TOTAL GABON
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BOSTON and TOTAL is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and TOTAL GABON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOTAL GABON 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 TOTAL GABON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOTAL GABON has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and TOTAL GABON go up and down completely randomly.
Pair Corralation between BOSTON BEER and TOTAL GABON
Assuming the 90 days trading horizon BOSTON BEER is expected to generate 1.56 times less return on investment than TOTAL GABON. But when comparing it to its historical volatility, BOSTON BEER A is 2.34 times less risky than TOTAL GABON. It trades about 0.28 of its potential returns per unit of risk. TOTAL GABON is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 15,800 in TOTAL GABON on September 4, 2024 and sell it today you would earn a total of 2,550 from holding TOTAL GABON or generate 16.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOSTON BEER A vs. TOTAL GABON
Performance |
| Timeline |
| BOSTON BEER A |
| TOTAL GABON |
BOSTON BEER and TOTAL GABON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and TOTAL GABON
The main advantage of trading using opposite BOSTON BEER and TOTAL GABON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, TOTAL GABON 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 TOTAL GABON will offset losses from the drop in TOTAL GABON's long position.| BOSTON BEER vs. TOTAL GABON | BOSTON BEER vs. Walgreens Boots Alliance | BOSTON BEER vs. Peak Resources Limited |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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