Correlation Between Boston Beer and Lucid
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Lucid 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 Lucid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Lucid Group, you can compare the effects of market volatilities on Boston Beer and Lucid 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 Lucid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Lucid.
Diversification Opportunities for Boston Beer and Lucid
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Boston and Lucid is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid 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 Lucid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucid Group has no effect on the direction of Boston Beer i.e., Boston Beer and Lucid go up and down completely randomly.
Pair Corralation between Boston Beer and Lucid
Considering the 90-day investment horizon Boston Beer is expected to generate 0.32 times more return on investment than Lucid. However, Boston Beer is 3.14 times less risky than Lucid. It trades about 0.34 of its potential returns per unit of risk. Lucid Group is currently generating about 0.0 per unit of risk. If you would invest 29,107 in Boston Beer on September 1, 2024 and sell it today you would earn a total of 2,517 from holding Boston Beer or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. Lucid Group
Performance |
| Timeline |
| Boston Beer |
| Lucid Group |
Boston Beer and Lucid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Lucid
The main advantage of trading using opposite Boston Beer and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Lucid 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 Lucid will offset losses from the drop in Lucid'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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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