Correlation Between SPARTAN STORES and Boston Beer
Can any of the company-specific risk be diversified away by investing in both SPARTAN STORES and Boston Beer 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 SPARTAN STORES and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPARTAN STORES and The Boston Beer, you can compare the effects of market volatilities on SPARTAN STORES and Boston Beer 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 SPARTAN STORES with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPARTAN STORES and Boston Beer.
Diversification Opportunities for SPARTAN STORES and Boston Beer
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SPARTAN and Boston is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SPARTAN STORES and The Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and SPARTAN STORES 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 SPARTAN STORES are associated (or correlated) with Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of SPARTAN STORES i.e., SPARTAN STORES and Boston Beer go up and down completely randomly.
Pair Corralation between SPARTAN STORES and Boston Beer
Assuming the 90 days trading horizon SPARTAN STORES is expected to generate 0.79 times more return on investment than Boston Beer. However, SPARTAN STORES is 1.26 times less risky than Boston Beer. It trades about -0.08 of its potential returns per unit of risk. The Boston Beer is currently generating about -0.56 per unit of risk. If you would invest 1,730 in SPARTAN STORES on October 29, 2024 and sell it today you would lose (40.00) from holding SPARTAN STORES or give up 2.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPARTAN STORES vs. The Boston Beer
Performance |
| Timeline |
| SPARTAN STORES |
| Boston Beer |
SPARTAN STORES and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPARTAN STORES and Boston Beer
The main advantage of trading using opposite SPARTAN STORES and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPARTAN STORES position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.| SPARTAN STORES vs. Apple Inc | SPARTAN STORES vs. Apple Inc | SPARTAN STORES vs. Apple Inc | SPARTAN STORES vs. Apple Inc |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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