Correlation Between FARO Technologies and BOSTON BEER
Can any of the company-specific risk be diversified away by investing in both FARO Technologies 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 FARO Technologies and BOSTON BEER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARO Technologies and BOSTON BEER A , you can compare the effects of market volatilities on FARO Technologies 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 FARO Technologies with a short position of BOSTON BEER. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARO Technologies and BOSTON BEER.
Diversification Opportunities for FARO Technologies and BOSTON BEER
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FARO and BOSTON is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding FARO Technologies 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 FARO Technologies 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 FARO Technologies 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 FARO Technologies i.e., FARO Technologies and BOSTON BEER go up and down completely randomly.
Pair Corralation between FARO Technologies and BOSTON BEER
Assuming the 90 days horizon FARO Technologies is expected to generate 4.55 times more return on investment than BOSTON BEER. However, FARO Technologies is 4.55 times more volatile than BOSTON BEER A . It trades about 0.28 of its potential returns per unit of risk. BOSTON BEER A is currently generating about 0.19 per unit of risk. If you would invest 1,640 in FARO Technologies on August 31, 2024 and sell it today you would earn a total of 860.00 from holding FARO Technologies or generate 52.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARO Technologies vs. BOSTON BEER A
Performance |
| Timeline |
| FARO Technologies |
| BOSTON BEER A |
FARO Technologies and BOSTON BEER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARO Technologies and BOSTON BEER
The main advantage of trading using opposite FARO Technologies and BOSTON BEER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARO Technologies 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.| FARO Technologies vs. Superior Plus Corp | FARO Technologies vs. NMI Holdings | FARO Technologies vs. Origin Agritech | FARO Technologies vs. SIVERS SEMICONDUCTORS AB |
| BOSTON BEER vs. SIVERS SEMICONDUCTORS AB | BOSTON BEER vs. Darden Restaurants | BOSTON BEER vs. Reliance Steel Aluminum | BOSTON BEER vs. Q2M Managementberatung AG |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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