Correlation Between Woolworths Group and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Woolworths Group 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 Woolworths Group and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woolworths Group Limited and The Boston Beer, you can compare the effects of market volatilities on Woolworths Group 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 Woolworths Group with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths Group and Boston Beer.
Diversification Opportunities for Woolworths Group and Boston Beer
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Woolworths and Boston is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths Group Limited and The Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Woolworths Group 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 Woolworths Group Limited 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 Woolworths Group i.e., Woolworths Group and Boston Beer go up and down completely randomly.
Pair Corralation between Woolworths Group and Boston Beer
Assuming the 90 days horizon Woolworths Group is expected to generate 91.2 times less return on investment than Boston Beer. But when comparing it to its historical volatility, Woolworths Group Limited is 1.27 times less risky than Boston Beer. It trades about 0.0 of its potential returns per unit of risk. The Boston Beer is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 27,840 in The Boston Beer on September 1, 2024 and sell it today you would earn a total of 1,180 from holding The Boston Beer or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Woolworths Group Limited vs. The Boston Beer
Performance |
| Timeline |
| Woolworths Group |
| Boston Beer |
Woolworths Group and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woolworths Group and Boston Beer
The main advantage of trading using opposite Woolworths Group and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths Group 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.| Woolworths Group vs. EIDESVIK OFFSHORE NK | Woolworths Group vs. AM EAGLE OUTFITTERS | Woolworths Group vs. SCANDMEDICAL SOLDK 040 | Woolworths Group vs. Avanos Medical |
| Boston Beer vs. Norwegian Air Shuttle | Boston Beer vs. Fair Isaac Corp | Boston Beer vs. Ming Le Sports | Boston Beer vs. PARKEN Sport Entertainment |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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