Correlation Between Boston Beer and Games Workshop
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Games Workshop 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 Games Workshop 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 Games Workshop Group, you can compare the effects of market volatilities on Boston Beer and Games Workshop 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 Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Games Workshop.
Diversification Opportunities for Boston Beer and Games Workshop
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Boston and Games is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and Games Workshop Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Games Workshop Group 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 Games Workshop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Games Workshop Group has no effect on the direction of Boston Beer i.e., Boston Beer and Games Workshop go up and down completely randomly.
Pair Corralation between Boston Beer and Games Workshop
Assuming the 90 days trading horizon The Boston Beer is expected to generate 0.94 times more return on investment than Games Workshop. However, The Boston Beer is 1.07 times less risky than Games Workshop. It trades about 0.16 of its potential returns per unit of risk. Games Workshop Group is currently generating about -0.08 per unit of risk. If you would invest 27,800 in The Boston Beer on August 24, 2024 and sell it today you would earn a total of 1,520 from holding The Boston Beer or generate 5.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Boston Beer vs. Games Workshop Group
Performance |
| Timeline |
| Boston Beer |
| Games Workshop Group |
Boston Beer and Games Workshop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Games Workshop
The main advantage of trading using opposite Boston Beer and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Games Workshop 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 Games Workshop will offset losses from the drop in Games Workshop's long position.| Boston Beer vs. DXC Technology Co | Boston Beer vs. Micron Technology | Boston Beer vs. UNIVMUSIC GRPADR050 | Boston Beer vs. Align Technology |
| Games Workshop vs. NISSAN CHEMICAL IND | Games Workshop vs. LG Display Co | Games Workshop vs. WESTLAKE CHEMICAL | Games Workshop vs. Sanyo Chemical Industries |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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