Correlation Between Boston Beer and SEI Investments
Can any of the company-specific risk be diversified away by investing in both Boston Beer and SEI Investments 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 SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and SEI Investments, you can compare the effects of market volatilities on Boston Beer and SEI Investments 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 SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and SEI Investments.
Diversification Opportunities for Boston Beer and SEI Investments
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Boston and SEI is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments 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 SEI Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Investments has no effect on the direction of Boston Beer i.e., Boston Beer and SEI Investments go up and down completely randomly.
Pair Corralation between Boston Beer and SEI Investments
Considering the 90-day investment horizon Boston Beer is expected to under-perform the SEI Investments. In addition to that, Boston Beer is 1.11 times more volatile than SEI Investments. It trades about -0.28 of its total potential returns per unit of risk. SEI Investments is currently generating about -0.15 per unit of volatility. If you would invest 8,345 in SEI Investments on November 27, 2024 and sell it today you would lose (343.00) from holding SEI Investments or give up 4.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. SEI Investments
Performance |
| Timeline |
| Boston Beer |
| SEI Investments |
Boston Beer and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and SEI Investments
The main advantage of trading using opposite Boston Beer and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, SEI Investments 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 SEI Investments will offset losses from the drop in SEI Investments' 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 |
| SEI Investments vs. Commerce Bancshares | SEI Investments vs. RLI Corp | SEI Investments vs. Westamerica Bancorporation | SEI Investments vs. Brown Brown |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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