Correlation Between BORR DRILLING and BOSTON BEER

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

By analyzing existing cross correlation between BORR DRILLING NEW and BOSTON BEER A , you can compare the effects of market volatilities on BORR DRILLING 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 BORR DRILLING with a short position of BOSTON BEER. Check out your portfolio center. Please also check ongoing floating volatility patterns of BORR DRILLING and BOSTON BEER.

Diversification Opportunities for BORR DRILLING and BOSTON BEER

0.74

Correlation Coefficient

BORR DRILLING  BOSTON BEER

Poor diversification

The 3 months correlation between BORR and BOSTON is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BORR DRILLING NEW and BOSTON BEER A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOSTON BEER A and BORR DRILLING 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 BORR DRILLING NEW 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 A has no effect on the direction of BORR DRILLING i.e., BORR DRILLING and BOSTON BEER go up and down completely randomly.

Pair Corralation between BORR DRILLING and BOSTON BEER

Assuming the 90 days horizon BORR DRILLING NEW is expected to under-perform the BOSTON BEER. In addition to that, BORR DRILLING is 1.96 times more volatile than BOSTON BEER A . It trades about -0.17 of its total potential returns per unit of risk. BOSTON BEER A is currently generating about -0.2 per unit of volatility. If you would invest  28,440  in BOSTON BEER A on December 29, 2024 and sell it today you would lose (6,360) from holding BOSTON BEER A or give up 22.36% of portfolio value over 90 days.

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

BORR DRILLING NEW  vs.  BOSTON BEER A

BORR DRILLING NEW

Risk-Adjusted Performance

Very Weak

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

BOSTON BEER A

Risk-Adjusted Performance

Very Weak

Over the last 90 days BOSTON BEER A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with BORR DRILLING and BOSTON BEER

The main advantage of trading using opposite BORR DRILLING and BOSTON BEER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BORR DRILLING 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 BORR DRILLING NEW and BOSTON BEER A 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.