Correlation Between Boston Beer and Bridgestone

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Bridgestone 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 Bridgestone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boston Beer and Bridgestone, you can compare the effects of market volatilities on Boston Beer and Bridgestone 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 Bridgestone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Bridgestone.

Diversification Opportunities for Boston Beer and Bridgestone

-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Boston and Bridgestone is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and Bridgestone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgestone 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 The Boston Beer are associated (or correlated) with Bridgestone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgestone has no effect on the direction of Boston Beer i.e., Boston Beer and Bridgestone go up and down completely randomly.

Pair Corralation between Boston Beer and Bridgestone

Assuming the 90 days trading horizon The Boston Beer is expected to under-perform the Bridgestone. In addition to that, Boston Beer is 1.22 times more volatile than Bridgestone. It trades about -0.26 of its total potential returns per unit of risk. Bridgestone is currently generating about -0.05 per unit of volatility. If you would invest  3,305  in Bridgestone on October 10, 2024 and sell it today you would lose (51.00) from holding Bridgestone or give up 1.54% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy94.44%
ValuesDaily Returns

The Boston Beer  vs.  Bridgestone

 Performance 
       Timeline  
Boston Beer 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in The Boston Beer are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Bridgestone 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bridgestone has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Bridgestone is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Boston Beer and Bridgestone Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Boston Beer and Bridgestone

The main advantage of trading using opposite Boston Beer and Bridgestone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Bridgestone 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 Bridgestone will offset losses from the drop in Bridgestone's long position.
The idea behind The Boston Beer and Bridgestone 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.
Check out your portfolio center.
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 Commodity Directory module to find actively traded commodities issued by global exchanges.

Other Complementary Tools

Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format