Correlation Between BOSTON BEER and Performance Food

Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and Performance Food 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 Performance Food 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 Performance Food Group, you can compare the effects of market volatilities on BOSTON BEER and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Performance Food.

Diversification Opportunities for BOSTON BEER and Performance Food

0.05

Correlation Coefficient

BOSTON BEER  Performance Food

Significant diversification

The 3 months correlation between BOSTON and Performance is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Performance Food go up and down completely randomly.

Pair Corralation between BOSTON BEER and Performance Food

Assuming the 90 days trading horizon BOSTON BEER A is expected to under-perform the Performance Food. In addition to that, BOSTON BEER is 1.28 times more volatile than Performance Food Group. It trades about -0.28 of its total potential returns per unit of risk. Performance Food Group is currently generating about -0.09 per unit of volatility. If you would invest  8,300  in Performance Food Group on November 28, 2024 and sell it today you would lose (600.00) from holding Performance Food Group or give up 7.23% of portfolio value over 90 days.

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

BOSTON BEER A   vs.  Performance Food Group

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 March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Performance Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Performance Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BOSTON BEER and Performance Food

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

The idea behind BOSTON BEER A and Performance Food Group 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.