Correlation Between Boston Beer and Air Lease
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Air Lease 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 Lease 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 Lease, you can compare the effects of market volatilities on Boston Beer and Air Lease 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 Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Air Lease.
Diversification Opportunities for Boston Beer and Air Lease
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Boston and Air is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Boston Beer i.e., Boston Beer and Air Lease go up and down completely randomly.
Pair Corralation between Boston Beer and Air Lease
Assuming the 90 days trading horizon Boston Beer is expected to generate 2.43 times less return on investment than Air Lease. In addition to that, Boston Beer is 1.04 times more volatile than Air Lease. It trades about 0.03 of its total potential returns per unit of risk. Air Lease is currently generating about 0.06 per unit of volatility. If you would invest 3,881 in Air Lease on September 1, 2024 and sell it today you would earn a total of 879.00 from holding Air Lease or generate 22.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boston Beer vs. Air Lease
Performance |
| Timeline |
| Boston Beer |
| Air Lease |
Boston Beer and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Air Lease
The main advantage of trading using opposite Boston Beer and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Air Lease 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 Lease will offset losses from the drop in Air Lease's long position.| Boston Beer vs. Norwegian Air Shuttle | Boston Beer vs. Fair Isaac Corp | Boston Beer vs. Ming Le Sports | Boston Beer vs. PARKEN Sport Entertainment |
| Air Lease vs. Caseys General Stores | Air Lease vs. Ping An Insurance | Air Lease vs. Selective Insurance Group | Air Lease vs. The Hanover Insurance |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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