Correlation Between BOSTON BEER and Sportsmans Warehouse

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

By analyzing existing cross correlation between BOSTON BEER A and Sportsmans Warehouse Holdings, you can compare the effects of market volatilities on BOSTON BEER and Sportsmans Warehouse 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 Sportsmans Warehouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Sportsmans Warehouse.

Diversification Opportunities for BOSTON BEER and Sportsmans Warehouse

-0.62

Correlation Coefficient

BOSTON BEER  Sportsmans Warehouse

Excellent diversification

The 3 months correlation between BOSTON and Sportsmans is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Sportsmans Warehouse Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsmans Warehouse 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 A are associated (or correlated) with Sportsmans Warehouse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsmans Warehouse has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Sportsmans Warehouse go up and down completely randomly.

Pair Corralation between BOSTON BEER and Sportsmans Warehouse

Assuming the 90 days trading horizon BOSTON BEER A is expected to generate 0.34 times more return on investment than Sportsmans Warehouse. However, BOSTON BEER A is 2.91 times less risky than Sportsmans Warehouse. It trades about 0.11 of its potential returns per unit of risk. Sportsmans Warehouse Holdings is currently generating about 0.01 per unit of risk. If you would invest  24,600  in BOSTON BEER A on October 10, 2024 and sell it today you would earn a total of  2,860  from holding BOSTON BEER A or generate 11.63% return on investment over 90 days.

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

BOSTON BEER A   vs.  Sportsmans Warehouse Holdings

BOSTON BEER A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BOSTON BEER A are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, BOSTON BEER exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sportsmans Warehouse

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sportsmans Warehouse Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sportsmans Warehouse is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BOSTON BEER and Sportsmans Warehouse

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

The idea behind BOSTON BEER A and Sportsmans Warehouse Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.