Correlation Between Boston Beer and Wabash National
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Wabash National 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 Wabash National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Wabash National, you can compare the effects of market volatilities on Boston Beer and Wabash National 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 Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Wabash National.
Diversification Opportunities for Boston Beer and Wabash National
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Boston and Wabash is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National 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 Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of Boston Beer i.e., Boston Beer and Wabash National go up and down completely randomly.
Pair Corralation between Boston Beer and Wabash National
Considering the 90-day investment horizon Boston Beer is expected to generate 0.83 times more return on investment than Wabash National. However, Boston Beer is 1.2 times less risky than Wabash National. It trades about -0.25 of its potential returns per unit of risk. Wabash National is currently generating about -0.3 per unit of risk. If you would invest 31,481 in Boston Beer on October 7, 2024 and sell it today you would lose (2,509) from holding Boston Beer or give up 7.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. Wabash National
Performance |
| Timeline |
| Boston Beer |
| Wabash National |
Boston Beer and Wabash National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Wabash National
The main advantage of trading using opposite Boston Beer and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Wabash National 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 Wabash National will offset losses from the drop in Wabash National's 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 |
| Wabash National vs. Rev Group | Wabash National vs. Gencor Industries | Wabash National vs. Alamo Group | Wabash National vs. Columbus McKinnon |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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