Correlation Between Big Rock and Mendocino Brewing
Can any of the company-specific risk be diversified away by investing in both Big Rock and Mendocino Brewing 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 Big Rock and Mendocino Brewing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Rock Brewery and Mendocino Brewing, you can compare the effects of market volatilities on Big Rock and Mendocino Brewing 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 Big Rock with a short position of Mendocino Brewing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Rock and Mendocino Brewing.
Diversification Opportunities for Big Rock and Mendocino Brewing
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Big and Mendocino is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Big Rock Brewery and Mendocino Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mendocino Brewing and Big Rock 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 Big Rock Brewery are associated (or correlated) with Mendocino Brewing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mendocino Brewing has no effect on the direction of Big Rock i.e., Big Rock and Mendocino Brewing go up and down completely randomly.
Pair Corralation between Big Rock and Mendocino Brewing
If you would invest 135.00 in Big Rock Brewery on August 27, 2024 and sell it today you would lose (5.00) from holding Big Rock Brewery or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 2.59% |
| Values | Daily Returns |
Big Rock Brewery vs. Mendocino Brewing
Performance |
| Timeline |
| Big Rock Brewery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Mendocino Brewing |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Big Rock and Mendocino Brewing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Rock and Mendocino Brewing
The main advantage of trading using opposite Big Rock and Mendocino Brewing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Rock position performs unexpectedly, Mendocino Brewing 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 Mendocino Brewing will offset losses from the drop in Mendocino Brewing's long position.| Big Rock vs. Molson Coors Brewing | Big Rock vs. Fomento Economico Mexicano | Big Rock vs. Compania Cervecerias Unidas | Big Rock vs. Anheuser Busch Inbev |
| Mendocino Brewing vs. Molson Coors Brewing | Mendocino Brewing vs. Budweiser Brewing | Mendocino Brewing vs. Boston Beer | Mendocino Brewing vs. Anheuser Busch InBev SANV |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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