Correlation Between Boston Beer and Paiute Oil

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

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

Diversification Opportunities for Boston Beer and Paiute Oil

0.58

Correlation Coefficient

Boston Beer  Paiute Oil

Very weak diversification

The 3 months correlation between Boston and Paiute is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Paiute Oil Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paiute Oil Mining 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 Paiute Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paiute Oil Mining has no effect on the direction of Boston Beer i.e., Boston Beer and Paiute Oil go up and down completely randomly.

Pair Corralation between Boston Beer and Paiute Oil

Considering the 90-day investment horizon Boston Beer is expected to under-perform the Paiute Oil. But the stock apears to be less risky and, when comparing its historical volatility, Boston Beer is 29.48 times less risky than Paiute Oil. The stock trades about -0.01 of its potential returns per unit of risk. The Paiute Oil Mining is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Paiute Oil Mining on December 2, 2024 and sell it today you would earn a total of  0.00  from holding Paiute Oil Mining or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.97%
Values	Daily Returns

Boston Beer  vs.  Paiute Oil Mining

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.

Paiute Oil Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Paiute Oil Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Boston Beer and Paiute Oil

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

The idea behind Boston Beer and Paiute Oil Mining 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.