Correlation Between Boston Beer and AUST AGRICULTURAL
Can any of the company-specific risk be diversified away by investing in both Boston Beer and AUST AGRICULTURAL 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 AUST AGRICULTURAL 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 AUST AGRICULTURAL, you can compare the effects of market volatilities on Boston Beer and AUST AGRICULTURAL 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 AUST AGRICULTURAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and AUST AGRICULTURAL.
Diversification Opportunities for Boston Beer and AUST AGRICULTURAL
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Boston and AUST is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and AUST AGRICULTURAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUST AGRICULTURAL 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 AUST AGRICULTURAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUST AGRICULTURAL has no effect on the direction of Boston Beer i.e., Boston Beer and AUST AGRICULTURAL go up and down completely randomly.
Pair Corralation between Boston Beer and AUST AGRICULTURAL
Assuming the 90 days trading horizon The Boston Beer is expected to generate 1.47 times more return on investment than AUST AGRICULTURAL. However, Boston Beer is 1.47 times more volatile than AUST AGRICULTURAL. It trades about 0.0 of its potential returns per unit of risk. AUST AGRICULTURAL is currently generating about -0.01 per unit of risk. If you would invest 32,250 in The Boston Beer on August 28, 2024 and sell it today you would lose (2,310) from holding The Boston Beer or give up 7.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.53% |
| Values | Daily Returns |
The Boston Beer vs. AUST AGRICULTURAL
Performance |
| Timeline |
| Boston Beer |
| AUST AGRICULTURAL |
Boston Beer and AUST AGRICULTURAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and AUST AGRICULTURAL
The main advantage of trading using opposite Boston Beer and AUST AGRICULTURAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, AUST AGRICULTURAL 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 AUST AGRICULTURAL will offset losses from the drop in AUST AGRICULTURAL's long position.| Boston Beer vs. Jacquet Metal Service | Boston Beer vs. CVS Health | Boston Beer vs. Diamondrock Hospitality Co | Boston Beer vs. Bumrungrad Hospital Public |
| AUST AGRICULTURAL vs. KB HOME | AUST AGRICULTURAL vs. TOREX SEMICONDUCTOR LTD | AUST AGRICULTURAL vs. Beazer Homes USA | AUST AGRICULTURAL vs. Nordic Semiconductor ASA |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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