Correlation Between Boston Beer and Ares Acquisition

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

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

Diversification Opportunities for Boston Beer and Ares Acquisition

0.42

Correlation Coefficient

Boston Beer  Ares Acquisition

Very weak diversification

The 3 months correlation between Boston and Ares is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Ares Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Acquisition 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 Boston Beer are associated (or correlated) with Ares Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Acquisition has no effect on the direction of Boston Beer i.e., Boston Beer and Ares Acquisition go up and down completely randomly.

Pair Corralation between Boston Beer and Ares Acquisition

Considering the 90-day investment horizon Boston Beer is expected to under-perform the Ares Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Boston Beer is 21.62 times less risky than Ares Acquisition. The stock trades about -0.01 of its potential returns per unit of risk. The Ares Acquisition is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Ares Acquisition on October 10, 2024 and sell it today you would earn a total of  1,098  from holding Ares Acquisition or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	79.8%
Values	Daily Returns

Boston Beer  vs.  Ares Acquisition

Boston Beer

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Boston Beer is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Ares Acquisition

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Acquisition are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Ares Acquisition is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Boston Beer and Ares Acquisition

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

The idea behind Boston Beer and Ares Acquisition 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.