Correlation Between Boston Beer and Chemours
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Chemours 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 Chemours into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Chemours Co, you can compare the effects of market volatilities on Boston Beer and Chemours 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 Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Chemours.
Diversification Opportunities for Boston Beer and Chemours
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Boston and Chemours is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Boston Beer i.e., Boston Beer and Chemours go up and down completely randomly.
Pair Corralation between Boston Beer and Chemours
Considering the 90-day investment horizon Boston Beer is expected to generate 1.28 times less return on investment than Chemours. But when comparing it to its historical volatility, Boston Beer is 2.13 times less risky than Chemours. It trades about 0.15 of its potential returns per unit of risk. Chemours Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,874 in Chemours Co on August 28, 2024 and sell it today you would earn a total of 320.00 from holding Chemours Co or generate 17.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. Chemours Co
Performance |
| Timeline |
| Boston Beer |
| Chemours |
Boston Beer and Chemours Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Chemours
The main advantage of trading using opposite Boston Beer and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' long position.| Boston Beer vs. Budweiser Brewing | Boston Beer vs. Anheuser Busch InBev SANV | Boston Beer vs. Ambev SA ADR | Boston Beer vs. Fomento Economico Mexicano |
| Chemours vs. Olin Corporation | Chemours vs. Cabot | Chemours vs. Kronos Worldwide | Chemours vs. LyondellBasell Industries NV |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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