Correlation Between Boston Omaha and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Boston Omaha and Boston Beer 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 Omaha and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Omaha Corp and Boston Beer, you can compare the effects of market volatilities on Boston Omaha and Boston Beer 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 Omaha with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Omaha and Boston Beer.
Diversification Opportunities for Boston Omaha and Boston Beer
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Boston and Boston is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Boston Omaha Corp and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Boston Omaha 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 Boston Omaha Corp are associated (or correlated) with Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Boston Omaha i.e., Boston Omaha and Boston Beer go up and down completely randomly.
Pair Corralation between Boston Omaha and Boston Beer
Considering the 90-day investment horizon Boston Omaha Corp is expected to generate 1.17 times more return on investment than Boston Beer. However, Boston Omaha is 1.17 times more volatile than Boston Beer. It trades about -0.08 of its potential returns per unit of risk. Boston Beer is currently generating about -0.24 per unit of risk. If you would invest 1,475 in Boston Omaha Corp on November 29, 2024 and sell it today you would lose (44.00) from holding Boston Omaha Corp or give up 2.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Omaha Corp vs. Boston Beer
Performance |
| Timeline |
| Boston Omaha Corp |
| Boston Beer |
Boston Omaha and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Omaha and Boston Beer
The main advantage of trading using opposite Boston Omaha and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Omaha position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.| Boston Omaha vs. Integral Ad Science | Boston Omaha vs. Cardlytics | Boston Omaha vs. Cimpress NV | Boston Omaha vs. QuinStreet |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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