Correlation Between Boston Beer and Southern
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Southern 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 Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Southern Co, you can compare the effects of market volatilities on Boston Beer and Southern 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 Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Southern.
Diversification Opportunities for Boston Beer and Southern
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boston and Southern is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Southern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern 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 Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of Boston Beer i.e., Boston Beer and Southern go up and down completely randomly.
Pair Corralation between Boston Beer and Southern
Considering the 90-day investment horizon Boston Beer is expected to generate 2.39 times more return on investment than Southern. However, Boston Beer is 2.39 times more volatile than Southern Co. It trades about 0.1 of its potential returns per unit of risk. Southern Co is currently generating about -0.24 per unit of risk. If you would invest 27,638 in Boston Beer on September 24, 2024 and sell it today you would earn a total of 2,639 from holding Boston Beer or generate 9.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.46% |
Values | Daily Returns |
Boston Beer vs. Southern Co
Performance |
Timeline |
Boston Beer |
Southern |
Boston Beer and Southern Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Boston Beer and Southern
The main advantage of trading using opposite Boston Beer and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.Boston Beer vs. Budweiser Brewing | Boston Beer vs. Fomento Economico Mexicano | Boston Beer vs. Heineken NV | Boston Beer vs. Suntory Beverage Food |
Southern vs. Consumers Energy | Southern vs. CMS Energy | Southern vs. Cadiz Depositary Shares | Southern vs. DTE Energy |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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