Correlation Between Boston Beer and SNDL

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

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

Diversification Opportunities for Boston Beer and SNDL

-0.3

Correlation Coefficient

Boston Beer  SNDL

Very good diversification

The 3 months correlation between Boston and SNDL is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Boston Beer i.e., Boston Beer and SNDL go up and down completely randomly.

Pair Corralation between Boston Beer and SNDL

Considering the 90-day investment horizon Boston Beer is expected to generate 0.44 times more return on investment than SNDL. However, Boston Beer is 2.26 times less risky than SNDL. It trades about 0.24 of its potential returns per unit of risk. SNDL Inc 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Boston Beer  vs.  SNDL Inc

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.

SNDL Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SNDL Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Boston Beer and SNDL

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

The idea behind Boston Beer and SNDL Inc 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.