Correlation Between Boston Beer and Powered Brands
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Powered Brands 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 Powered Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Powered Brands, you can compare the effects of market volatilities on Boston Beer and Powered Brands 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 Powered Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Powered Brands.
Diversification Opportunities for Boston Beer and Powered Brands
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Boston and Powered is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Powered Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powered Brands 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 Powered Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powered Brands has no effect on the direction of Boston Beer i.e., Boston Beer and Powered Brands go up and down completely randomly.
Pair Corralation between Boston Beer and Powered Brands
If you would invest (100.00) in Powered Brands on October 26, 2024 and sell it today you would earn a total of 100.00 from holding Powered Brands or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.0% |
| Values | Daily Returns |
Boston Beer vs. Powered Brands
Performance |
| Timeline |
| Boston Beer |
| Powered Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Boston Beer and Powered Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Powered Brands
The main advantage of trading using opposite Boston Beer and Powered Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Powered Brands 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 Powered Brands will offset losses from the drop in Powered Brands' 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 |
| Powered Brands vs. Lipocine | Powered Brands vs. Modine Manufacturing | Powered Brands vs. Analog Devices | Powered Brands vs. NETGEAR |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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