Correlation Between FARM 51 and Boston Beer
Can any of the company-specific risk be diversified away by investing in both FARM 51 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 FARM 51 and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARM 51 GROUP and The Boston Beer, you can compare the effects of market volatilities on FARM 51 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 FARM 51 with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM 51 and Boston Beer.
Diversification Opportunities for FARM 51 and Boston Beer
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FARM and Boston is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding FARM 51 GROUP and The Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and FARM 51 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 FARM 51 GROUP 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 FARM 51 i.e., FARM 51 and Boston Beer go up and down completely randomly.
Pair Corralation between FARM 51 and Boston Beer
Assuming the 90 days horizon FARM 51 GROUP is expected to generate 0.98 times more return on investment than Boston Beer. However, FARM 51 GROUP is 1.02 times less risky than Boston Beer. It trades about 0.01 of its potential returns per unit of risk. The Boston Beer is currently generating about -0.38 per unit of risk. If you would invest 301.00 in FARM 51 GROUP on October 17, 2024 and sell it today you would earn a total of 0.00 from holding FARM 51 GROUP or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
FARM 51 GROUP vs. The Boston Beer
Performance |
| Timeline |
| FARM 51 GROUP |
| Boston Beer |
FARM 51 and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM 51 and Boston Beer
The main advantage of trading using opposite FARM 51 and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM 51 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.| FARM 51 vs. Renesas Electronics | FARM 51 vs. AEGEAN AIRLINES | FARM 51 vs. SOUTHWEST AIRLINES | FARM 51 vs. ARROW ELECTRONICS |
| Boston Beer vs. DATAGROUP SE | Boston Beer vs. Automatic Data Processing | Boston Beer vs. Linedata Services SA | Boston Beer vs. TERADATA |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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