Correlation Between Boston Beer and United American

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

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

Diversification Opportunities for Boston Beer and United American

0.11

Correlation Coefficient

Boston Beer  United American

Average diversification

The 3 months correlation between Boston and United is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and United American Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United American Heal 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 United American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United American Heal has no effect on the direction of Boston Beer i.e., Boston Beer and United American go up and down completely randomly.

Pair Corralation between Boston Beer and United American

If you would invest  29,665  in Boston Beer on September 5, 2024 and sell it today you would earn a total of  1,637  from holding Boston Beer or generate 5.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Boston Beer  vs.  United American Healthcare

Boston Beer

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

United American Heal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United American Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, United American is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Boston Beer and United American

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

The idea behind Boston Beer and United American Healthcare 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.