Correlation Between Procter Gamble and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Procter Gamble 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 Procter Gamble and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Boston Beer, you can compare the effects of market volatilities on Procter Gamble 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 Procter Gamble with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Boston Beer.
Diversification Opportunities for Procter Gamble and Boston Beer
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Procter and Boston is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Procter Gamble 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 Procter Gamble 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 Procter Gamble i.e., Procter Gamble and Boston Beer go up and down completely randomly.
Pair Corralation between Procter Gamble and Boston Beer
Allowing for the 90-day total investment horizon Procter Gamble is expected to under-perform the Boston Beer. But the stock apears to be less risky and, when comparing its historical volatility, Procter Gamble is 1.71 times less risky than Boston Beer. The stock trades about -0.02 of its potential returns per unit of risk. The Boston Beer is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 27,079 in Boston Beer on September 25, 2024 and sell it today you would earn a total of 2,954 from holding Boston Beer or generate 10.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Procter Gamble vs. Boston Beer
Performance |
Timeline |
Procter Gamble |
Boston Beer |
Procter Gamble and Boston Beer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Procter Gamble and Boston Beer
The main advantage of trading using opposite Procter Gamble and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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.Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Equity Valuation Check real value of public entities based on technical and fundamental data |