Correlation Between BRC and Boston Beer

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

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

Diversification Opportunities for BRC and Boston Beer

-0.72

Correlation Coefficient

BRC  Boston Beer

Pay attention - limited upside

The 3 months correlation between BRC and Boston is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding BRC Inc and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and BRC 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 BRC Inc 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 BRC i.e., BRC and Boston Beer go up and down completely randomly.

Pair Corralation between BRC and Boston Beer

Given the investment horizon of 90 days BRC is expected to generate 31.32 times less return on investment than Boston Beer. In addition to that, BRC is 1.56 times more volatile than Boston Beer. It trades about 0.0 of its total potential returns per unit of risk. Boston Beer is currently generating about 0.08 per unit of volatility. If you would invest  27,133  in Boston Beer on October 7, 2024 and sell it today you would earn a total of  1,839  from holding Boston Beer or generate 6.78% return on investment over 90 days.

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

BRC Inc  vs.  Boston Beer

BRC Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, BRC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Boston Beer

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BRC and Boston Beer

The main advantage of trading using opposite BRC and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRC 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 BRC Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.