Correlation Between Campbell Soup and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Campbell Soup 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 Campbell Soup and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Campbell Soup and Boston Beer, you can compare the effects of market volatilities on Campbell Soup 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 Campbell Soup with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Campbell Soup and Boston Beer.
Diversification Opportunities for Campbell Soup and Boston Beer
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Campbell and Boston is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Campbell Soup and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Campbell Soup 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 Campbell Soup 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 Campbell Soup i.e., Campbell Soup and Boston Beer go up and down completely randomly.
Pair Corralation between Campbell Soup and Boston Beer
Considering the 90-day investment horizon Campbell Soup is expected to under-perform the Boston Beer. But the stock apears to be less risky and, when comparing its historical volatility, Campbell Soup is 1.28 times less risky than Boston Beer. The stock trades about -0.2 of its potential returns per unit of risk. The Boston Beer is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 30,151 in Boston Beer on August 24, 2024 and sell it today you would earn a total of 567.00 from holding Boston Beer or generate 1.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Campbell Soup vs. Boston Beer
Performance |
| Timeline |
| Campbell Soup |
| Boston Beer |
Campbell Soup and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Campbell Soup and Boston Beer
The main advantage of trading using opposite Campbell Soup and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Campbell Soup 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.| Campbell Soup vs. Better Choice | Campbell Soup vs. BioAdaptives | Campbell Soup vs. Beyond Oil | Campbell Soup vs. Bon Natural Life |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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