Correlation Between Boston Beer and Star Holdings
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Star Holdings 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 Star Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Star Holdings, you can compare the effects of market volatilities on Boston Beer and Star Holdings 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 Star Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Star Holdings.
Diversification Opportunities for Boston Beer and Star Holdings
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Boston and Star is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Star Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star 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 Star Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Holdings has no effect on the direction of Boston Beer i.e., Boston Beer and Star Holdings go up and down completely randomly.
Pair Corralation between Boston Beer and Star Holdings
Considering the 90-day investment horizon Boston Beer is expected to generate 1.02 times more return on investment than Star Holdings. However, Boston Beer is 1.02 times more volatile than Star Holdings. It trades about 0.01 of its potential returns per unit of risk. Star Holdings is currently generating about -0.03 per unit of risk. If you would invest 33,322 in Boston Beer on August 31, 2024 and sell it today you would lose (1,698) from holding Boston Beer or give up 5.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. Star Holdings
Performance |
| Timeline |
| Boston Beer |
| Star Holdings |
Boston Beer and Star Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Star Holdings
The main advantage of trading using opposite Boston Beer and Star Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Star Holdings 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 Star Holdings will offset losses from the drop in Star Holdings' 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 |
| Star Holdings vs. Avient Corp | Star Holdings vs. Air Products and | Star Holdings vs. Ecolab Inc | Star Holdings vs. Mativ Holdings |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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