Correlation Between Boston Beer and Expand Energy
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Expand Energy 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 Expand Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Expand Energy, you can compare the effects of market volatilities on Boston Beer and Expand Energy 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 Expand Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Expand Energy.
Diversification Opportunities for Boston Beer and Expand Energy
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Boston and Expand is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Expand Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expand Energy 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 Expand Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expand Energy has no effect on the direction of Boston Beer i.e., Boston Beer and Expand Energy go up and down completely randomly.
Pair Corralation between Boston Beer and Expand Energy
Considering the 90-day investment horizon Boston Beer is expected to generate 1.66 times less return on investment than Expand Energy. In addition to that, Boston Beer is 1.17 times more volatile than Expand Energy. It trades about 0.05 of its total potential returns per unit of risk. Expand Energy is currently generating about 0.09 per unit of volatility. If you would invest 9,517 in Expand Energy on September 12, 2024 and sell it today you would earn a total of 185.00 from holding Expand Energy or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Boston Beer vs. Expand Energy
Performance |
| Timeline |
| Boston Beer |
| Expand Energy |
Boston Beer and Expand Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Expand Energy
The main advantage of trading using opposite Boston Beer and Expand Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Expand Energy 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 Expand Energy will offset losses from the drop in Expand Energy'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 |
| Expand Energy vs. Rave Restaurant Group | Expand Energy vs. Boston Beer | Expand Energy vs. National Beverage Corp | Expand Energy vs. Cannae Holdings |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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