Correlation Between Boston Beer and Mondelez International

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

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

Diversification Opportunities for Boston Beer and Mondelez International

-0.52

Correlation Coefficient

Boston Beer  Mondelez International

Excellent diversification

The 3 months correlation between Boston and Mondelez is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Mondelez International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondelez International 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 Mondelez International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondelez International has no effect on the direction of Boston Beer i.e., Boston Beer and Mondelez International go up and down completely randomly.

Pair Corralation between Boston Beer and Mondelez International

Considering the 90-day investment horizon Boston Beer is expected to under-perform the Mondelez International. In addition to that, Boston Beer is 1.25 times more volatile than Mondelez International. It trades about -0.17 of its total potential returns per unit of risk. Mondelez International is currently generating about 0.15 per unit of volatility. If you would invest  5,909  in Mondelez International on December 29, 2024 and sell it today you would earn a total of  863.00  from holding Mondelez International or generate 14.6% return on investment over 90 days.

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

Boston Beer  vs.  Mondelez International

Boston Beer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boston Beer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Mondelez International

Risk-Adjusted Performance

Good

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

Pair Trading with Boston Beer and Mondelez International

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

The idea behind Boston Beer and Mondelez International 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 Global Correlations module to find global opportunities by holding instruments from different markets.