Correlation Between Boston Beer and America West

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

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

Diversification Opportunities for Boston Beer and America West

0.0

Correlation Coefficient

Boston Beer  America West

Pay attention - limited upside

The 3 months correlation between Boston and America is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and America West Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on America West Holdings 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 America West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of America West Holdings has no effect on the direction of Boston Beer i.e., Boston Beer and America West go up and down completely randomly.

Pair Corralation between Boston Beer and America West

If you would invest (100.00) in America West Holdings on October 10, 2024 and sell it today you would earn a total of  100.00  from holding America West Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Boston Beer  vs.  America West Holdings

Boston Beer

Risk-Adjusted Performance

1 of 100

Weak

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.

America West Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days America West Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, America West is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boston Beer and America West

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

The idea behind Boston Beer and America West Holdings 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.