Correlation Between Boston Beer and PNC FINL

Can any of the company-specific risk be diversified away by investing in both Boston Beer and PNC FINL 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 PNC FINL 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 PNC FINL SER, you can compare the effects of market volatilities on Boston Beer and PNC FINL 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 PNC FINL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and PNC FINL.

Diversification Opportunities for Boston Beer and PNC FINL

0.93

Correlation Coefficient

Boston Beer  PNC FINL

Almost no diversification

The 3 months correlation between Boston and PNC is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and PNC FINL SER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC FINL SER 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 PNC FINL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNC FINL SER has no effect on the direction of Boston Beer i.e., Boston Beer and PNC FINL go up and down completely randomly.

Pair Corralation between Boston Beer and PNC FINL

Assuming the 90 days trading horizon The Boston Beer is expected to under-perform the PNC FINL. In addition to that, Boston Beer is 1.21 times more volatile than PNC FINL SER. It trades about 0.0 of its total potential returns per unit of risk. PNC FINL SER is currently generating about 0.05 per unit of volatility. If you would invest  13,514  in PNC FINL SER on October 8, 2024 and sell it today you would earn a total of  5,286  from holding PNC FINL SER or generate 39.11% return on investment over 90 days.

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

The Boston Beer  vs.  PNC FINL SER

Boston Beer

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Boston Beer are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Boston Beer reported solid returns over the last few months and may actually be approaching a breakup point.

PNC FINL SER

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PNC FINL SER are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, PNC FINL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Beer and PNC FINL

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

The idea behind The Boston Beer and PNC FINL SER 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.