Correlation Between Boston Beer and Laureate Education
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Laureate Education 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 Laureate Education 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 Laureate Education, you can compare the effects of market volatilities on Boston Beer and Laureate Education 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 Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Laureate Education.
Diversification Opportunities for Boston Beer and Laureate Education
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Boston and Laureate is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education 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 Laureate Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laureate Education has no effect on the direction of Boston Beer i.e., Boston Beer and Laureate Education go up and down completely randomly.
Pair Corralation between Boston Beer and Laureate Education
Assuming the 90 days trading horizon The Boston Beer is expected to under-perform the Laureate Education. In addition to that, Boston Beer is 1.34 times more volatile than Laureate Education. It trades about -0.53 of its total potential returns per unit of risk. Laureate Education is currently generating about 0.03 per unit of volatility. If you would invest 1,750 in Laureate Education on November 1, 2024 and sell it today you would earn a total of 10.00 from holding Laureate Education or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boston Beer vs. Laureate Education
Performance |
| Timeline |
| Boston Beer |
| Laureate Education |
Boston Beer and Laureate Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Laureate Education
The main advantage of trading using opposite Boston Beer and Laureate Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Laureate Education 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 Laureate Education will offset losses from the drop in Laureate Education's long position.| Boston Beer vs. Semiconductor Manufacturing International | Boston Beer vs. British American Tobacco | Boston Beer vs. Elmos Semiconductor SE | Boston Beer vs. SLR Investment Corp |
| Laureate Education vs. SIDETRADE EO 1 | Laureate Education vs. Dairy Farm International | Laureate Education vs. SALESFORCE INC CDR | Laureate Education vs. TITAN MACHINERY |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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