Correlation Between BOSTON BEER and Virtus Investment

Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and Virtus Investment 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 Virtus Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BOSTON BEER A and Virtus Investment Partners, you can compare the effects of market volatilities on BOSTON BEER and Virtus Investment 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 Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Virtus Investment.

Diversification Opportunities for BOSTON BEER and Virtus Investment

0.94

Correlation Coefficient

BOSTON BEER  Virtus Investment

Almost no diversification

The 3 months correlation between BOSTON and Virtus is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 A are associated (or correlated) with Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Virtus Investment go up and down completely randomly.

Pair Corralation between BOSTON BEER and Virtus Investment

Assuming the 90 days trading horizon BOSTON BEER A is expected to under-perform the Virtus Investment. In addition to that, BOSTON BEER is 1.03 times more volatile than Virtus Investment Partners. It trades about -0.01 of its total potential returns per unit of risk. Virtus Investment Partners is currently generating about 0.06 per unit of volatility. If you would invest  18,397  in Virtus Investment Partners on September 4, 2024 and sell it today you would earn a total of  5,003  from holding Virtus Investment Partners or generate 27.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

BOSTON BEER A   vs.  Virtus Investment Partners

BOSTON BEER A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BOSTON BEER A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, BOSTON BEER exhibited solid returns over the last few months and may actually be approaching a breakup point.

Virtus Investment

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Virtus Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BOSTON BEER and Virtus Investment

The main advantage of trading using opposite BOSTON BEER and Virtus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, Virtus Investment 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 Virtus Investment will offset losses from the drop in Virtus Investment's long position.

The idea behind BOSTON BEER A and Virtus Investment Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.