Correlation Between Boston Beer and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Equinor ASA 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 Equinor ASA 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 Equinor ASA, you can compare the effects of market volatilities on Boston Beer and Equinor ASA 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 Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Equinor ASA.
Diversification Opportunities for Boston Beer and Equinor ASA
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Boston and Equinor is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and Equinor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA 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 Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA has no effect on the direction of Boston Beer i.e., Boston Beer and Equinor ASA go up and down completely randomly.
Pair Corralation between Boston Beer and Equinor ASA
Assuming the 90 days trading horizon The Boston Beer is expected to generate 0.79 times more return on investment than Equinor ASA. However, The Boston Beer is 1.26 times less risky than Equinor ASA. It trades about -0.13 of its potential returns per unit of risk. Equinor ASA is currently generating about -0.11 per unit of risk. If you would invest 23,060 in The Boston Beer on December 8, 2024 and sell it today you would lose (1,300) from holding The Boston Beer or give up 5.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boston Beer vs. Equinor ASA
Performance |
| Timeline |
| Boston Beer |
| Equinor ASA |
Boston Beer and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Equinor ASA
The main advantage of trading using opposite Boston Beer and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Equinor ASA 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 Equinor ASA will offset losses from the drop in Equinor ASA's long position.| Boston Beer vs. East Africa Metals | Boston Beer vs. CORNISH METALS INC | Boston Beer vs. OPKO HEALTH | Boston Beer vs. Bumrungrad Hospital Public |
| Equinor ASA vs. Daito Trust Construction | Equinor ASA vs. GAMING FAC SA | Equinor ASA vs. CONTAGIOUS GAMING INC | Equinor ASA vs. FUTURE GAMING GRP |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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