Correlation Between Boston Beer and Thor Industries
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Thor Industries 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 Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Thor Industries, you can compare the effects of market volatilities on Boston Beer and Thor Industries 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 Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Thor Industries.
Diversification Opportunities for Boston Beer and Thor Industries
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Boston and Thor is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries 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 Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of Boston Beer i.e., Boston Beer and Thor Industries go up and down completely randomly.
Pair Corralation between Boston Beer and Thor Industries
Considering the 90-day investment horizon Boston Beer is expected to generate 9.57 times less return on investment than Thor Industries. In addition to that, Boston Beer is 1.01 times more volatile than Thor Industries. It trades about 0.0 of its total potential returns per unit of risk. Thor Industries is currently generating about 0.03 per unit of volatility. If you would invest 7,566 in Thor Industries on September 26, 2024 and sell it today you would earn a total of 2,077 from holding Thor Industries or generate 27.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. Thor Industries
Performance |
| Timeline |
| Boston Beer |
| Thor Industries |
Boston Beer and Thor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Thor Industries
The main advantage of trading using opposite Boston Beer and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Thor Industries 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 Thor Industries will offset losses from the drop in Thor Industries' long position.| Boston Beer vs. Budweiser Brewing | Boston Beer vs. Fomento Economico Mexicano | Boston Beer vs. Heineken NV | Boston Beer vs. Suntory Beverage Food |
| Thor Industries vs. Marine Products | Thor Industries vs. Malibu Boats | Thor Industries vs. Brunswick | Thor Industries vs. LCI Industries |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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