Correlation Between Boston Beer and Marex Group

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

By analyzing existing cross correlation between Boston Beer and Marex Group plc, you can compare the effects of market volatilities on Boston Beer and Marex Group 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 Marex Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Marex Group.

Diversification Opportunities for Boston Beer and Marex Group

0.86

Correlation Coefficient

Boston Beer  Marex Group

Very poor diversification

The 3 months correlation between Boston and Marex is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Marex Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marex Group plc 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 are associated (or correlated) with Marex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marex Group plc has no effect on the direction of Boston Beer i.e., Boston Beer and Marex Group go up and down completely randomly.

Pair Corralation between Boston Beer and Marex Group

Considering the 90-day investment horizon Boston Beer is expected to generate 1.47 times less return on investment than Marex Group. But when comparing it to its historical volatility, Boston Beer is 1.12 times less risky than Marex Group. It trades about 0.16 of its potential returns per unit of risk. Marex Group plc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,489  in Marex Group plc on September 14, 2024 and sell it today you would earn a total of  601.00  from holding Marex Group plc or generate 24.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Boston Beer  vs.  Marex Group plc

Boston Beer

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 12 (%) 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.

Marex Group plc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marex Group plc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Marex Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Beer and Marex Group

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

The idea behind Boston Beer and Marex Group plc 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.