Correlation Between Boston Beer and Woolworths Group
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Woolworths 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 Woolworths 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 Woolworths Group Limited, you can compare the effects of market volatilities on Boston Beer and Woolworths 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 Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Woolworths Group.
Diversification Opportunities for Boston Beer and Woolworths Group
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Boston and Woolworths is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths 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 Woolworths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Group has no effect on the direction of Boston Beer i.e., Boston Beer and Woolworths Group go up and down completely randomly.
Pair Corralation between Boston Beer and Woolworths Group
Assuming the 90 days trading horizon The Boston Beer is expected to generate 1.62 times more return on investment than Woolworths Group. However, Boston Beer is 1.62 times more volatile than Woolworths Group Limited. It trades about 0.3 of its potential returns per unit of risk. Woolworths Group Limited is currently generating about 0.12 per unit of risk. If you would invest 26,580 in The Boston Beer on September 1, 2024 and sell it today you would earn a total of 2,440 from holding The Boston Beer or generate 9.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Boston Beer vs. Woolworths Group Limited
Performance |
| Timeline |
| Boston Beer |
| Woolworths Group |
Boston Beer and Woolworths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Woolworths Group
The main advantage of trading using opposite Boston Beer and Woolworths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Woolworths 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 Woolworths Group will offset losses from the drop in Woolworths Group's long position.| Boston Beer vs. Norwegian Air Shuttle | Boston Beer vs. Fair Isaac Corp | Boston Beer vs. Ming Le Sports | Boston Beer vs. PARKEN Sport Entertainment |
| Woolworths Group vs. EIDESVIK OFFSHORE NK | Woolworths Group vs. AM EAGLE OUTFITTERS | Woolworths Group vs. SCANDMEDICAL SOLDK 040 | Woolworths Group vs. Avanos Medical |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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