Correlation Between Boston Beer and Russell Corp

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

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

Diversification Opportunities for Boston Beer and Russell Corp

0.0

Correlation Coefficient

Boston Beer  Russell Corp

Pay attention - limited upside

The 3 months correlation between Boston and Russell is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Russell Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Russell Corp 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 Russell Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Russell Corp has no effect on the direction of Boston Beer i.e., Boston Beer and Russell Corp go up and down completely randomly.

Pair Corralation between Boston Beer and Russell Corp

If you would invest  32,262  in Boston Beer on September 28, 2024 and sell it today you would lose (2,125) from holding Boston Beer or give up 6.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Boston Beer  vs.  Russell Corp

Boston Beer

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Boston Beer is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Russell Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Russell Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Russell Corp is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Boston Beer and Russell Corp

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

The idea behind Boston Beer and Russell Corp 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.