Correlation Between Boston Beer and Western Acquisition
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Western Acquisition 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 Western Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Western Acquisition Ventures, you can compare the effects of market volatilities on Boston Beer and Western Acquisition 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 Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Western Acquisition.
Diversification Opportunities for Boston Beer and Western Acquisition
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Boston and Western is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of Boston Beer i.e., Boston Beer and Western Acquisition go up and down completely randomly.
Pair Corralation between Boston Beer and Western Acquisition
Considering the 90-day investment horizon Boston Beer is expected to under-perform the Western Acquisition. In addition to that, Boston Beer is 1.65 times more volatile than Western Acquisition Ventures. It trades about 0.0 of its total potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.01 per unit of volatility. If you would invest 1,080 in Western Acquisition Ventures on September 14, 2024 and sell it today you would earn a total of 20.00 from holding Western Acquisition Ventures or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. Western Acquisition Ventures
Performance |
| Timeline |
| Boston Beer |
| Western Acquisition |
Boston Beer and Western Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Western Acquisition
The main advantage of trading using opposite Boston Beer and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition's long position.| Boston Beer vs. Fomento Economico Mexicano | Boston Beer vs. Carlsberg AS | Boston Beer vs. Compania Cervecerias Unidas | Boston Beer vs. Molson Coors Beverage |
| Western Acquisition vs. Visa Class A | Western Acquisition vs. Diamond Hill Investment | Western Acquisition vs. Distoken Acquisition | Western Acquisition vs. AllianceBernstein Holding LP |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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