Correlation Between Boston Beer and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Kaiser Aluminum 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 Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Kaiser Aluminum, you can compare the effects of market volatilities on Boston Beer and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Kaiser Aluminum.
Diversification Opportunities for Boston Beer and Kaiser Aluminum
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Boston and Kaiser is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Boston Beer i.e., Boston Beer and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Boston Beer and Kaiser Aluminum
Considering the 90-day investment horizon Boston Beer is expected to generate 0.92 times more return on investment than Kaiser Aluminum. However, Boston Beer is 1.09 times less risky than Kaiser Aluminum. It trades about 0.06 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.03 per unit of risk. If you would invest 26,820 in Boston Beer on September 3, 2024 and sell it today you would earn a total of 4,804 from holding Boston Beer or generate 17.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. Kaiser Aluminum
Performance |
| Timeline |
| Boston Beer |
| Kaiser Aluminum |
Boston Beer and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Kaiser Aluminum
The main advantage of trading using opposite Boston Beer and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum'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 |
| Kaiser Aluminum vs. SPACE | Kaiser Aluminum vs. Ampleforth | Kaiser Aluminum vs. ionet | Kaiser Aluminum vs. Memecoin |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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