Correlation Between Boston Beer and Moneysupermarket
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Moneysupermarket 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 Moneysupermarket into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boston Beer and Moneysupermarket Group PLC, you can compare the effects of market volatilities on Boston Beer and Moneysupermarket 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 Moneysupermarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Moneysupermarket.
Diversification Opportunities for Boston Beer and Moneysupermarket
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boston and Moneysupermarket is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and Moneysupermarket Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moneysupermarket 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 The Boston Beer are associated (or correlated) with Moneysupermarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moneysupermarket has no effect on the direction of Boston Beer i.e., Boston Beer and Moneysupermarket go up and down completely randomly.
Pair Corralation between Boston Beer and Moneysupermarket
Assuming the 90 days trading horizon The Boston Beer is expected to generate 0.81 times more return on investment than Moneysupermarket. However, The Boston Beer is 1.24 times less risky than Moneysupermarket. It trades about -0.02 of its potential returns per unit of risk. Moneysupermarket Group PLC is currently generating about -0.04 per unit of risk. If you would invest 25,280 in The Boston Beer on November 2, 2024 and sell it today you would lose (1,320) from holding The Boston Beer or give up 5.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boston Beer vs. Moneysupermarket Group PLC
Performance |
| Timeline |
| Boston Beer |
| Moneysupermarket |
Boston Beer and Moneysupermarket Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Moneysupermarket
The main advantage of trading using opposite Boston Beer and Moneysupermarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Moneysupermarket 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 Moneysupermarket will offset losses from the drop in Moneysupermarket's long position.| Boston Beer vs. Guangdong Investment Limited | Boston Beer vs. DIVERSIFIED ROYALTY | Boston Beer vs. BlueScope Steel Limited | Boston Beer vs. Apollo Investment Corp |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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