Correlation Between Boston Beer and Brasilagro Adr

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

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

Diversification Opportunities for Boston Beer and Brasilagro Adr

-0.74

Correlation Coefficient

Boston Beer  Brasilagro Adr

Pay attention - limited upside

The 3 months correlation between Boston and Brasilagro is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Brasilagro Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brasilagro Adr 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 Brasilagro Adr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brasilagro Adr has no effect on the direction of Boston Beer i.e., Boston Beer and Brasilagro Adr go up and down completely randomly.

Pair Corralation between Boston Beer and Brasilagro Adr

Considering the 90-day investment horizon Boston Beer is expected to generate 1.12 times more return on investment than Brasilagro Adr. However, Boston Beer is 1.12 times more volatile than Brasilagro Adr. It trades about 0.15 of its potential returns per unit of risk. Brasilagro Adr is currently generating about -0.07 per unit of risk. If you would invest  27,172  in Boston Beer on August 30, 2024 and sell it today you would earn a total of  4,196  from holding Boston Beer or generate 15.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Boston Beer  vs.  Brasilagro Adr

Boston Beer

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Boston Beer displayed solid returns over the last few months and may actually be approaching a breakup point.

Brasilagro Adr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brasilagro Adr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Boston Beer and Brasilagro Adr

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

The idea behind Boston Beer and Brasilagro Adr 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.