Correlation Between Loud Beverage and Boston Beer

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

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

Diversification Opportunities for Loud Beverage and Boston Beer

0.0

Correlation Coefficient

Loud Beverage  Boston Beer

Pay attention - limited upside

The 3 months correlation between Loud and Boston is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Loud Beverage Group and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Loud Beverage 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 Loud Beverage Group 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 Loud Beverage i.e., Loud Beverage and Boston Beer go up and down completely randomly.

Pair Corralation between Loud Beverage and Boston Beer

If you would invest  4.90  in Loud Beverage Group on December 19, 2024 and sell it today you would earn a total of  0.00  from holding Loud Beverage Group or generate 0.0% return on investment over 90 days.

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

Loud Beverage Group  vs.  Boston Beer

Loud Beverage Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loud Beverage Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Loud Beverage is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Boston Beer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boston Beer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Loud Beverage and Boston Beer

The main advantage of trading using opposite Loud Beverage and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loud Beverage 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 Loud Beverage Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.