Correlation Between Comstock Holding and Boston Beer

Can any of the company-specific risk be diversified away by investing in both Comstock Holding 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 Comstock Holding and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Comstock Holding Companies and Boston Beer, you can compare the effects of market volatilities on Comstock Holding 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 Comstock Holding with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comstock Holding and Boston Beer.

Diversification Opportunities for Comstock Holding and Boston Beer

-0.29

Correlation Coefficient

Comstock Holding  Boston Beer

Very good diversification

The 3 months correlation between Comstock and Boston is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Comstock Holding Companies and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Comstock Holding 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 Comstock Holding Companies 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 Comstock Holding i.e., Comstock Holding and Boston Beer go up and down completely randomly.

Pair Corralation between Comstock Holding and Boston Beer

Given the investment horizon of 90 days Comstock Holding is expected to generate 2.67 times less return on investment than Boston Beer. In addition to that, Comstock Holding is 3.2 times more volatile than Boston Beer. It trades about 0.02 of its total potential returns per unit of risk. Boston Beer is currently generating about 0.14 per unit of volatility. If you would invest  27,637  in Boston Beer on September 17, 2024 and sell it today you would earn a total of  3,864  from holding Boston Beer or generate 13.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Comstock Holding Companies  vs.  Boston Beer

Comstock Holding Com

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Comstock Holding Companies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Comstock Holding is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Boston Beer

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Boston Beer displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Comstock Holding and Boston Beer

The main advantage of trading using opposite Comstock Holding and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comstock Holding 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.

The idea behind Comstock Holding Companies and Boston Beer 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.