Correlation Between INSURANCE AUST and Boston Beer

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

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

Diversification Opportunities for INSURANCE AUST and Boston Beer

0.81

Correlation Coefficient

INSURANCE AUST  Boston Beer

Very poor diversification

The 3 months correlation between INSURANCE and Boston is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP and The Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and INSURANCE AUST 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 INSURANCE AUST GRP 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 INSURANCE AUST i.e., INSURANCE AUST and Boston Beer go up and down completely randomly.

Pair Corralation between INSURANCE AUST and Boston Beer

Assuming the 90 days trading horizon INSURANCE AUST GRP is expected to generate 0.7 times more return on investment than Boston Beer. However, INSURANCE AUST GRP is 1.43 times less risky than Boston Beer. It trades about 0.09 of its potential returns per unit of risk. The Boston Beer is currently generating about 0.0 per unit of risk. If you would invest  268.00  in INSURANCE AUST GRP on September 26, 2024 and sell it today you would earn a total of  226.00  from holding INSURANCE AUST GRP or generate 84.33% return on investment over 90 days.

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

INSURANCE AUST GRP  vs.  The Boston Beer

INSURANCE AUST GRP

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INSURANCE AUST GRP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, INSURANCE AUST may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Boston Beer

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Boston Beer are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Boston Beer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INSURANCE AUST and Boston Beer

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

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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.