Correlation Between Boston Beer and Paysafe

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

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

Diversification Opportunities for Boston Beer and Paysafe

-0.42

Correlation Coefficient

Boston Beer  Paysafe

Very good diversification

The 3 months correlation between Boston and Paysafe is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Paysafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paysafe 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 Paysafe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paysafe has no effect on the direction of Boston Beer i.e., Boston Beer and Paysafe go up and down completely randomly.

Pair Corralation between Boston Beer and Paysafe

Considering the 90-day investment horizon Boston Beer is expected to generate 0.31 times more return on investment than Paysafe. However, Boston Beer is 3.24 times less risky than Paysafe. It trades about 0.24 of its potential returns per unit of risk. Paysafe is currently generating about -0.05 per unit of risk. If you would invest  27,543  in Boston Beer on September 13, 2024 and sell it today you would earn a total of  4,367  from holding Boston Beer or generate 15.86% return on investment over 90 days.

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

Boston Beer  vs.  Paysafe

Boston Beer

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Boston Beer displayed solid returns over the last few months and may actually be approaching a breakup point.

Paysafe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paysafe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Boston Beer and Paysafe

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

The idea behind Boston Beer and Paysafe 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.