Correlation Between Boston Beer and United Guardian
Can any of the company-specific risk be diversified away by investing in both Boston Beer and United Guardian 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 United Guardian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and United Guardian, you can compare the effects of market volatilities on Boston Beer and United Guardian 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 United Guardian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and United Guardian.
Diversification Opportunities for Boston Beer and United Guardian
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Boston and United is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and United Guardian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Guardian 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 United Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Guardian has no effect on the direction of Boston Beer i.e., Boston Beer and United Guardian go up and down completely randomly.
Pair Corralation between Boston Beer and United Guardian
Considering the 90-day investment horizon Boston Beer is expected to generate 0.4 times more return on investment than United Guardian. However, Boston Beer is 2.49 times less risky than United Guardian. It trades about 0.13 of its potential returns per unit of risk. United Guardian is currently generating about -0.42 per unit of risk. If you would invest 30,433 in Boston Beer on August 27, 2024 and sell it today you would earn a total of 1,098 from holding Boston Beer or generate 3.61% 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. United Guardian
Performance |
| Timeline |
| Boston Beer |
| United Guardian |
Boston Beer and United Guardian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and United Guardian
The main advantage of trading using opposite Boston Beer and United Guardian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, United Guardian 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 United Guardian will offset losses from the drop in United Guardian's long position.| Boston Beer vs. Budweiser Brewing | Boston Beer vs. Anheuser Busch InBev SANV | Boston Beer vs. Ambev SA ADR | Boston Beer vs. Fomento Economico Mexicano |
| United Guardian vs. Utah Medical Products | United Guardian vs. Union Bankshares | United Guardian vs. Psychemedics | United Guardian vs. Unity Bancorp |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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