Correlation Between Boston Beer and GEN Restaurant
Can any of the company-specific risk be diversified away by investing in both Boston Beer and GEN Restaurant 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 GEN Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and GEN Restaurant Group,, you can compare the effects of market volatilities on Boston Beer and GEN Restaurant 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 GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and GEN Restaurant.
Diversification Opportunities for Boston Beer and GEN Restaurant
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Boston and GEN is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Boston Beer i.e., Boston Beer and GEN Restaurant go up and down completely randomly.
Pair Corralation between Boston Beer and GEN Restaurant
Considering the 90-day investment horizon Boston Beer is expected to under-perform the GEN Restaurant. But the stock apears to be less risky and, when comparing its historical volatility, Boston Beer is 2.06 times less risky than GEN Restaurant. The stock trades about -0.06 of its potential returns per unit of risk. The GEN Restaurant Group, is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 826.00 in GEN Restaurant Group, on October 26, 2024 and sell it today you would lose (146.00) from holding GEN Restaurant Group, or give up 17.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. GEN Restaurant Group,
Performance |
| Timeline |
| Boston Beer |
| GEN Restaurant Group, |
Boston Beer and GEN Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and GEN Restaurant
The main advantage of trading using opposite Boston Beer and GEN Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, GEN Restaurant 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 GEN Restaurant will offset losses from the drop in GEN Restaurant'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 |
| GEN Restaurant vs. Compania Cervecerias Unidas | GEN Restaurant vs. SBM Offshore NV | GEN Restaurant vs. Boston Beer | GEN Restaurant vs. The Cheesecake Factory |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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