Correlation Between Boston Beer and RTL GROUP
Can any of the company-specific risk be diversified away by investing in both Boston Beer and RTL GROUP 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 RTL GROUP 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 RTL GROUP UNSPADR, you can compare the effects of market volatilities on Boston Beer and RTL GROUP 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 RTL GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and RTL GROUP.
Diversification Opportunities for Boston Beer and RTL GROUP
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Boston and RTL is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and RTL GROUP UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL GROUP UNSPADR 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 RTL GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL GROUP UNSPADR has no effect on the direction of Boston Beer i.e., Boston Beer and RTL GROUP go up and down completely randomly.
Pair Corralation between Boston Beer and RTL GROUP
Assuming the 90 days trading horizon The Boston Beer is expected to generate 0.29 times more return on investment than RTL GROUP. However, The Boston Beer is 3.48 times less risky than RTL GROUP. It trades about 0.02 of its potential returns per unit of risk. RTL GROUP UNSPADR is currently generating about -0.07 per unit of risk. If you would invest 29,760 in The Boston Beer on September 13, 2024 and sell it today you would earn a total of 80.00 from holding The Boston Beer or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boston Beer vs. RTL GROUP UNSPADR
Performance |
| Timeline |
| Boston Beer |
| RTL GROUP UNSPADR |
Boston Beer and RTL GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and RTL GROUP
The main advantage of trading using opposite Boston Beer and RTL GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, RTL GROUP 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 RTL GROUP will offset losses from the drop in RTL GROUP'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 |
| RTL GROUP vs. Uber Technologies | RTL GROUP vs. Warner Music Group | RTL GROUP vs. CHEMICAL INDUSTRIES | RTL GROUP vs. PKSHA TECHNOLOGY INC |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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