Correlation Between High Performance and Boston Beer
Can any of the company-specific risk be diversified away by investing in both High Performance 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 High Performance and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Performance Beverages and Boston Beer, you can compare the effects of market volatilities on High Performance 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 High Performance with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Performance and Boston Beer.
Diversification Opportunities for High Performance and Boston Beer
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between High and Boston is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding High Performance Beverages and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and High Performance 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 High Performance Beverages 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 High Performance i.e., High Performance and Boston Beer go up and down completely randomly.
Pair Corralation between High Performance and Boston Beer
Given the investment horizon of 90 days High Performance Beverages is expected to generate 146.28 times more return on investment than Boston Beer. However, High Performance is 146.28 times more volatile than Boston Beer. It trades about 0.34 of its potential returns per unit of risk. Boston Beer is currently generating about -0.03 per unit of risk. If you would invest 0.01 in High Performance Beverages on October 22, 2024 and sell it today you would lose (0.01) from holding High Performance Beverages or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
High Performance Beverages vs. Boston Beer
Performance |
| Timeline |
| High Performance Bev |
| Boston Beer |
High Performance and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Performance and Boston Beer
The main advantage of trading using opposite High Performance and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Performance 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.| High Performance vs. V Group | High Performance vs. Fbec Worldwide | High Performance vs. Hiru Corporation | High Performance vs. Alkame Holdings |
| Boston Beer vs. Anheuser Busch Inbev | Boston Beer vs. Molson Coors Beverage | Boston Beer vs. Heineken NV | Boston Beer vs. Ambev SA ADR |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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