Correlation Between Boston Beer and G III
Can any of the company-specific risk be diversified away by investing in both Boston Beer and G III 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 G III 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 G III Apparel Group, you can compare the effects of market volatilities on Boston Beer and G III 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 G III. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and G III.
Diversification Opportunities for Boston Beer and G III
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Boston and GI4 is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of Boston Beer i.e., Boston Beer and G III go up and down completely randomly.
Pair Corralation between Boston Beer and G III
Assuming the 90 days trading horizon Boston Beer is expected to generate 15.99 times less return on investment than G III. But when comparing it to its historical volatility, The Boston Beer is 1.4 times less risky than G III. It trades about 0.01 of its potential returns per unit of risk. G III Apparel Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,220 in G III Apparel Group on September 13, 2024 and sell it today you would earn a total of 2,060 from holding G III Apparel Group or generate 168.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
The Boston Beer vs. G III Apparel Group
Performance |
| Timeline |
| Boston Beer |
| G III Apparel |
Boston Beer and G III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and G III
The main advantage of trading using opposite Boston Beer and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, G III 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 G III will offset losses from the drop in G III's long position.| Boston Beer vs. Gol Intelligent Airlines | Boston Beer vs. Sunny Optical Technology | Boston Beer vs. DXC Technology Co | Boston Beer vs. United Airlines Holdings |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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