Correlation Between Apogee Enterprises and Boston Beer

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

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

Diversification Opportunities for Apogee Enterprises and Boston Beer

0.5

Correlation Coefficient

Apogee Enterprises  Boston Beer

Very weak diversification

The 3 months correlation between Apogee and Boston is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Apogee Enterprises 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 Apogee Enterprises are associated (or correlated) with Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Apogee Enterprises i.e., Apogee Enterprises and Boston Beer go up and down completely randomly.

Pair Corralation between Apogee Enterprises and Boston Beer

Given the investment horizon of 90 days Apogee Enterprises is expected to generate 0.97 times more return on investment than Boston Beer. However, Apogee Enterprises is 1.03 times less risky than Boston Beer. It trades about 0.03 of its potential returns per unit of risk. Boston Beer is currently generating about -0.02 per unit of risk. If you would invest  4,250  in Apogee Enterprises on October 12, 2024 and sell it today you would earn a total of  825.00  from holding Apogee Enterprises or generate 19.41% return on investment over 90 days.

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

Apogee Enterprises  vs.  Boston Beer

Apogee Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apogee Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Boston Beer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Beer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Apogee Enterprises and Boston Beer

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

The idea behind Apogee Enterprises and Boston Beer 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.