Correlation Between MACOM Technology and Boston Beer
Can any of the company-specific risk be diversified away by investing in both MACOM Technology 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 MACOM Technology and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and Boston Beer, you can compare the effects of market volatilities on MACOM Technology 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 MACOM Technology with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Boston Beer.
Diversification Opportunities for MACOM Technology and Boston Beer
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MACOM and Boston is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and MACOM Technology 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 MACOM Technology Solutions 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 MACOM Technology i.e., MACOM Technology and Boston Beer go up and down completely randomly.
Pair Corralation between MACOM Technology and Boston Beer
Given the investment horizon of 90 days MACOM Technology Solutions is expected to generate 1.0 times more return on investment than Boston Beer. However, MACOM Technology is 1.0 times more volatile than Boston Beer. It trades about 0.07 of its potential returns per unit of risk. Boston Beer is currently generating about -0.01 per unit of risk. If you would invest 6,764 in MACOM Technology Solutions on August 24, 2024 and sell it today you would earn a total of 6,686 from holding MACOM Technology Solutions or generate 98.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Boston Beer
Performance |
| Timeline |
| MACOM Technology Sol |
| Boston Beer |
MACOM Technology and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Boston Beer
The main advantage of trading using opposite MACOM Technology and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology 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.| MACOM Technology vs. Eshallgo Class A | MACOM Technology vs. Amtech Systems | MACOM Technology vs. Gold Fields Ltd | MACOM Technology vs. Aegean Airlines SA |
| Boston Beer vs. Anheuser Busch Inbev | Boston Beer vs. Molson Coors Beverage | Boston Beer vs. Heineken NV | Boston Beer vs. Ambev SA ADR |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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