Correlation Between Boston Beer and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Scandinavian Tobacco 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 Scandinavian Tobacco 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 Scandinavian Tobacco Group, you can compare the effects of market volatilities on Boston Beer and Scandinavian Tobacco 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 Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Scandinavian Tobacco.
Diversification Opportunities for Boston Beer and Scandinavian Tobacco
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Boston and Scandinavian is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Boston Beer i.e., Boston Beer and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Boston Beer and Scandinavian Tobacco
Assuming the 90 days trading horizon The Boston Beer is expected to generate 0.56 times more return on investment than Scandinavian Tobacco. However, The Boston Beer is 1.77 times less risky than Scandinavian Tobacco. It trades about 0.3 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.13 per unit of risk. If you would invest 27,180 in The Boston Beer on September 3, 2024 and sell it today you would earn a total of 2,500 from holding The Boston Beer or generate 9.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boston Beer vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Boston Beer |
| Scandinavian Tobacco |
Boston Beer and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Scandinavian Tobacco
The main advantage of trading using opposite Boston Beer and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| Boston Beer vs. Globe Trade Centre | Boston Beer vs. RETAIL FOOD GROUP | Boston Beer vs. SIDETRADE EO 1 | Boston Beer vs. The Trade Desk |
| Scandinavian Tobacco vs. British American Tobacco | Scandinavian Tobacco vs. JAPAN TOBACCO UNSPADR12 | Scandinavian Tobacco vs. Imperial Brands PLC |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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