Correlation Between Boston Beer and Aeye
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Aeye 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 Aeye into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Aeye Inc, you can compare the effects of market volatilities on Boston Beer and Aeye 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 Aeye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Aeye.
Diversification Opportunities for Boston Beer and Aeye
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boston and Aeye is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Aeye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeye Inc 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 Aeye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeye Inc has no effect on the direction of Boston Beer i.e., Boston Beer and Aeye go up and down completely randomly.
Pair Corralation between Boston Beer and Aeye
Considering the 90-day investment horizon Boston Beer is expected to generate 0.26 times more return on investment than Aeye. However, Boston Beer is 3.83 times less risky than Aeye. It trades about 0.16 of its potential returns per unit of risk. Aeye Inc is currently generating about -0.02 per unit of risk. If you would invest 29,947 in Boston Beer on August 31, 2024 and sell it today you would earn a total of 1,421 from holding Boston Beer or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. Aeye Inc
Performance |
| Timeline |
| Boston Beer |
| Aeye Inc |
Boston Beer and Aeye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Aeye
The main advantage of trading using opposite Boston Beer and Aeye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Aeye 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 Aeye will offset losses from the drop in Aeye'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 |
| Aeye vs. Innoviz Technologies | Aeye vs. Luminar Technologies | Aeye vs. Hesai Group American | Aeye vs. Mobileye Global Class |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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