Correlation Between Boston Beer and Infrared Cameras
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Infrared Cameras 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 Infrared Cameras into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Infrared Cameras Holdings, you can compare the effects of market volatilities on Boston Beer and Infrared Cameras 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 Infrared Cameras. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Infrared Cameras.
Diversification Opportunities for Boston Beer and Infrared Cameras
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boston and Infrared is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Infrared Cameras Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infrared Cameras Holdings 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 Infrared Cameras. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infrared Cameras Holdings has no effect on the direction of Boston Beer i.e., Boston Beer and Infrared Cameras go up and down completely randomly.
Pair Corralation between Boston Beer and Infrared Cameras
Considering the 90-day investment horizon Boston Beer is expected to generate 0.36 times more return on investment than Infrared Cameras. However, Boston Beer is 2.79 times less risky than Infrared Cameras. It trades about 0.29 of its potential returns per unit of risk. Infrared Cameras Holdings is currently generating about -0.18 per unit of risk. If you would invest 29,494 in Boston Beer on September 2, 2024 and sell it today you would earn a total of 2,130 from holding Boston Beer or generate 7.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. Infrared Cameras Holdings
Performance |
| Timeline |
| Boston Beer |
| Infrared Cameras Holdings |
Boston Beer and Infrared Cameras Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Infrared Cameras
The main advantage of trading using opposite Boston Beer and Infrared Cameras positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Infrared Cameras 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 Infrared Cameras will offset losses from the drop in Infrared Cameras' long position.| Boston Beer vs. Compania Cervecerias Unidas | Boston Beer vs. Molson Coors Brewing | Boston Beer vs. Suntory Beverage Food | Boston Beer vs. Carlsberg AS |
| Infrared Cameras vs. Suntory Beverage Food | Infrared Cameras vs. Boston Beer | Infrared Cameras vs. Diageo PLC ADR | Infrared Cameras vs. Titan International |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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