Correlation Between United Breweries and BOSTON BEER
Can any of the company-specific risk be diversified away by investing in both United Breweries 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 United Breweries and BOSTON BEER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Breweries Co and BOSTON BEER A , you can compare the effects of market volatilities on United Breweries 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 United Breweries with a short position of BOSTON BEER. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and BOSTON BEER.
Diversification Opportunities for United Breweries and BOSTON BEER
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and BOSTON is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and BOSTON BEER A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOSTON BEER A and United Breweries 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 United Breweries Co 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 A has no effect on the direction of United Breweries i.e., United Breweries and BOSTON BEER go up and down completely randomly.
Pair Corralation between United Breweries and BOSTON BEER
Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.92 times more return on investment than BOSTON BEER. However, United Breweries Co is 1.09 times less risky than BOSTON BEER. It trades about 0.13 of its potential returns per unit of risk. BOSTON BEER A is currently generating about -0.54 per unit of risk. If you would invest 1,080 in United Breweries Co on October 25, 2024 and sell it today you would earn a total of 40.00 from holding United Breweries Co or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. BOSTON BEER A
Performance |
| Timeline |
| United Breweries |
| BOSTON BEER A |
United Breweries and BOSTON BEER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and BOSTON BEER
The main advantage of trading using opposite United Breweries and BOSTON BEER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries 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.| United Breweries vs. Wizz Air Holdings | United Breweries vs. PURETECH HEALTH PLC | United Breweries vs. Pentair plc | United Breweries vs. National Health Investors |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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