Correlation Between Boston Beer and Global E
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Global E 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 Global E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Global E Online, you can compare the effects of market volatilities on Boston Beer and Global E 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 Global E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Global E.
Diversification Opportunities for Boston Beer and Global E
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boston and Global is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online 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 Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of Boston Beer i.e., Boston Beer and Global E go up and down completely randomly.
Pair Corralation between Boston Beer and Global E
Considering the 90-day investment horizon Boston Beer is expected to generate 8.37 times less return on investment than Global E. But when comparing it to its historical volatility, Boston Beer is 2.32 times less risky than Global E. It trades about 0.12 of its potential returns per unit of risk. Global E Online is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 3,849 in Global E Online on August 28, 2024 and sell it today you would earn a total of 1,353 from holding Global E Online or generate 35.15% 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. Global E Online
Performance |
| Timeline |
| Boston Beer |
| Global E Online |
Boston Beer and Global E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Global E
The main advantage of trading using opposite Boston Beer and Global E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Global E 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 Global E will offset losses from the drop in Global E's 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 |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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