Correlation Between Boston Beer and JD Sports
Can any of the company-specific risk be diversified away by investing in both Boston Beer and JD Sports 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 JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and JD Sports Fashion, you can compare the effects of market volatilities on Boston Beer and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and JD Sports.
Diversification Opportunities for Boston Beer and JD Sports
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Boston and JDDSF is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Boston Beer i.e., Boston Beer and JD Sports go up and down completely randomly.
Pair Corralation between Boston Beer and JD Sports
Considering the 90-day investment horizon Boston Beer is expected to generate 0.5 times more return on investment than JD Sports. However, Boston Beer is 1.99 times less risky than JD Sports. It trades about 0.16 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.15 per unit of risk. If you would invest 28,752 in Boston Beer on September 16, 2024 and sell it today you would earn a total of 2,749 from holding Boston Beer or generate 9.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Boston Beer vs. JD Sports Fashion
Performance |
Timeline |
Boston Beer |
JD Sports Fashion |
Boston Beer and JD Sports Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Boston Beer and JD Sports
The main advantage of trading using opposite Boston Beer and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.Boston Beer vs. Fomento Economico Mexicano | Boston Beer vs. Carlsberg AS | Boston Beer vs. Molson Coors Beverage | Boston Beer vs. Molson Coors Brewing |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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