Correlation Between Park Ohio and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Park Ohio 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 Park Ohio and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Ohio Holdings and Boston Beer, you can compare the effects of market volatilities on Park Ohio 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 Park Ohio with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and Boston Beer.
Diversification Opportunities for Park Ohio and Boston Beer
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Park and Boston is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Park Ohio 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 Park Ohio Holdings 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 Park Ohio i.e., Park Ohio and Boston Beer go up and down completely randomly.
Pair Corralation between Park Ohio and Boston Beer
Given the investment horizon of 90 days Park Ohio Holdings is expected to generate 1.34 times more return on investment than Boston Beer. However, Park Ohio is 1.34 times more volatile than Boston Beer. It trades about -0.05 of its potential returns per unit of risk. Boston Beer is currently generating about -0.08 per unit of risk. If you would invest 2,745 in Park Ohio Holdings on December 5, 2024 and sell it today you would lose (465.00) from holding Park Ohio Holdings or give up 16.94% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Park Ohio Holdings vs. Boston Beer
Performance |
Timeline |
Park Ohio Holdings |
Boston Beer |
Park Ohio and Boston Beer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Park Ohio and Boston Beer
The main advantage of trading using opposite Park Ohio and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Ohio 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.Park Ohio vs. Hurco Companies | Park Ohio vs. Enerpac Tool Group | Park Ohio vs. China Yuchai International | Park Ohio vs. Luxfer Holdings PLC |
Boston Beer vs. Anheuser Busch Inbev | Boston Beer vs. Molson Coors Beverage | Boston Beer vs. Heineken NV | Boston Beer vs. Ambev SA ADR |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing |