Correlation Between Boston Beer and Air Liquide
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Air Liquide 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 Air Liquide 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 Air Liquide SA, you can compare the effects of market volatilities on Boston Beer and Air Liquide 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 Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Air Liquide.
Diversification Opportunities for Boston Beer and Air Liquide
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boston and Air is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA 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 Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of Boston Beer i.e., Boston Beer and Air Liquide go up and down completely randomly.
Pair Corralation between Boston Beer and Air Liquide
Assuming the 90 days trading horizon The Boston Beer is expected to under-perform the Air Liquide. In addition to that, Boston Beer is 1.78 times more volatile than Air Liquide SA. It trades about -0.4 of its total potential returns per unit of risk. Air Liquide SA is currently generating about 0.34 per unit of volatility. If you would invest 15,812 in Air Liquide SA on November 5, 2024 and sell it today you would earn a total of 1,046 from holding Air Liquide SA or generate 6.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boston Beer vs. Air Liquide SA
Performance |
| Timeline |
| Boston Beer |
| Air Liquide SA |
Boston Beer and Air Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Air Liquide
The main advantage of trading using opposite Boston Beer and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Air Liquide 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 Air Liquide will offset losses from the drop in Air Liquide's long position.| Boston Beer vs. CHINA EDUCATION GROUP | Boston Beer vs. SBI Insurance Group | Boston Beer vs. Safety Insurance Group | Boston Beer vs. EMBARK EDUCATION LTD |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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