Correlation Between BOSTON BEER and Walgreens Boots
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and Walgreens Boots 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 Walgreens Boots 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 Walgreens Boots Alliance, you can compare the effects of market volatilities on BOSTON BEER and Walgreens Boots 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 Walgreens Boots. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Walgreens Boots.
Diversification Opportunities for BOSTON BEER and Walgreens Boots
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BOSTON and Walgreens is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Walgreens Boots Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walgreens Boots Alliance 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 Walgreens Boots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walgreens Boots Alliance has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Walgreens Boots go up and down completely randomly.
Pair Corralation between BOSTON BEER and Walgreens Boots
Assuming the 90 days trading horizon BOSTON BEER A is expected to generate 0.5 times more return on investment than Walgreens Boots. However, BOSTON BEER A is 2.0 times less risky than Walgreens Boots. It trades about 0.23 of its potential returns per unit of risk. Walgreens Boots Alliance is currently generating about 0.03 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOSTON BEER A vs. Walgreens Boots Alliance
Performance |
| Timeline |
| BOSTON BEER A |
| Walgreens Boots Alliance |
BOSTON BEER and Walgreens Boots Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and Walgreens Boots
The main advantage of trading using opposite BOSTON BEER and Walgreens Boots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, Walgreens Boots 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 Walgreens Boots will offset losses from the drop in Walgreens Boots' 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 |
| Walgreens Boots vs. Hitachi Construction Machinery | Walgreens Boots vs. MAGNUM MINING EXP | Walgreens Boots vs. BOSTON BEER A | Walgreens Boots vs. H FARM SPA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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