Correlation Between BOSTON BEER and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and STMicroelectronics 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 STMicroelectronics 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 STMicroelectronics NV, you can compare the effects of market volatilities on BOSTON BEER and STMicroelectronics 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 STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and STMicroelectronics.
Diversification Opportunities for BOSTON BEER and STMicroelectronics
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BOSTON and STMicroelectronics is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics 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 STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and STMicroelectronics go up and down completely randomly.
Pair Corralation between BOSTON BEER and STMicroelectronics
Assuming the 90 days trading horizon BOSTON BEER A is expected to generate 0.88 times more return on investment than STMicroelectronics. However, BOSTON BEER A is 1.13 times less risky than STMicroelectronics. It trades about -0.01 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.02 per unit of risk. If you would invest 32,150 in BOSTON BEER A on October 11, 2024 and sell it today you would lose (5,270) from holding BOSTON BEER A or give up 16.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOSTON BEER A vs. STMicroelectronics NV
Performance |
| Timeline |
| BOSTON BEER A |
| STMicroelectronics |
BOSTON BEER and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and STMicroelectronics
The main advantage of trading using opposite BOSTON BEER and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| BOSTON BEER vs. Datadog | BOSTON BEER vs. SCIENCE IN SPORT | BOSTON BEER vs. DATAGROUP SE | BOSTON BEER vs. American Eagle Outfitters |
| STMicroelectronics vs. FEMALE HEALTH | STMicroelectronics vs. Fuji Media Holdings | STMicroelectronics vs. REMEDY ENTERTAINMENT OYJ | STMicroelectronics vs. Ubisoft Entertainment SA |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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