Correlation Between Broadstone Net and Boston Beer

Can any of the company-specific risk be diversified away by investing in both Broadstone Net 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 Broadstone Net and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Broadstone Net Lease and Boston Beer, you can compare the effects of market volatilities on Broadstone Net 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 Broadstone Net with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadstone Net and Boston Beer.

Diversification Opportunities for Broadstone Net and Boston Beer

-0.73

Correlation Coefficient

Broadstone Net  Boston Beer

Pay attention - limited upside

The 3 months correlation between Broadstone and Boston is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Broadstone Net 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 Broadstone Net Lease 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 has no effect on the direction of Broadstone Net i.e., Broadstone Net and Boston Beer go up and down completely randomly.

Pair Corralation between Broadstone Net and Boston Beer

Considering the 90-day investment horizon Broadstone Net Lease is expected to generate 0.7 times more return on investment than Boston Beer. However, Broadstone Net Lease is 1.42 times less risky than Boston Beer. It trades about 0.03 of its potential returns per unit of risk. Boston Beer is currently generating about 0.02 per unit of risk. If you would invest  1,549  in Broadstone Net Lease on September 22, 2024 and sell it today you would earn a total of  58.00  from holding Broadstone Net Lease or generate 3.74% return on investment over 90 days.

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

Broadstone Net Lease  vs.  Boston Beer

Broadstone Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Boston Beer

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Broadstone Net and Boston Beer

The main advantage of trading using opposite Broadstone Net and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadstone Net 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 Broadstone Net Lease and Boston Beer 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.