Correlation Between Boston Beer and Gentex
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Gentex 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 Gentex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Gentex, you can compare the effects of market volatilities on Boston Beer and Gentex 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 Gentex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Gentex.
Diversification Opportunities for Boston Beer and Gentex
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boston and Gentex is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Boston Beer i.e., Boston Beer and Gentex go up and down completely randomly.
Pair Corralation between Boston Beer and Gentex
Considering the 90-day investment horizon Boston Beer is expected to under-perform the Gentex. In addition to that, Boston Beer is 2.45 times more volatile than Gentex. It trades about -0.5 of its total potential returns per unit of risk. Gentex is currently generating about -0.76 per unit of volatility. If you would invest 3,046 in Gentex on October 14, 2024 and sell it today you would lose (360.00) from holding Gentex or give up 11.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. Gentex
Performance |
| Timeline |
| Boston Beer |
| Gentex |
Boston Beer and Gentex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Gentex
The main advantage of trading using opposite Boston Beer and Gentex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Gentex 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 Gentex will offset losses from the drop in Gentex'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 |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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