Correlation Between Boston Beer and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Axalta Coating 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 Boston Beer and Axalta Coating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Axalta Coating Systems, you can compare the effects of market volatilities on Boston Beer and Axalta Coating 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 Boston Beer with a short position of Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Axalta Coating.
Diversification Opportunities for Boston Beer and Axalta Coating
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boston and Axalta is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems and Boston Beer 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 Boston Beer are associated (or correlated) with Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of Boston Beer i.e., Boston Beer and Axalta Coating go up and down completely randomly.
Pair Corralation between Boston Beer and Axalta Coating
Considering the 90-day investment horizon Boston Beer is expected to generate 2.25 times less return on investment than Axalta Coating. In addition to that, Boston Beer is 1.03 times more volatile than Axalta Coating Systems. It trades about 0.03 of its total potential returns per unit of risk. Axalta Coating Systems is currently generating about 0.07 per unit of volatility. If you would invest 3,587 in Axalta Coating Systems on September 1, 2024 and sell it today you would earn a total of 459.00 from holding Axalta Coating Systems or generate 12.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. Axalta Coating Systems
Performance |
| Timeline |
| Boston Beer |
| Axalta Coating Systems |
Boston Beer and Axalta Coating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Axalta Coating
The main advantage of trading using opposite Boston Beer and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating's long position.| Boston Beer vs. Anheuser Busch Inbev | Boston Beer vs. Molson Coors Beverage | Boston Beer vs. Heineken NV | Boston Beer vs. Ambev SA ADR |
| Axalta Coating vs. Linde plc Ordinary | Axalta Coating vs. Air Products and | Axalta Coating vs. Aquagold International | Axalta Coating vs. Thrivent High Yield |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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