Correlation Between Boston Beer and Sligro Food

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

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

Diversification Opportunities for Boston Beer and Sligro Food

-0.56

Correlation Coefficient

Boston Beer  Sligro Food

Excellent diversification

The 3 months correlation between Boston and Sligro is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Sligro Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sligro Food Group 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 Sligro Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sligro Food Group has no effect on the direction of Boston Beer i.e., Boston Beer and Sligro Food go up and down completely randomly.

Pair Corralation between Boston Beer and Sligro Food

Considering the 90-day investment horizon Boston Beer is expected to generate 1.38 times more return on investment than Sligro Food. However, Boston Beer is 1.38 times more volatile than Sligro Food Group. It trades about -0.02 of its potential returns per unit of risk. Sligro Food Group is currently generating about -0.07 per unit of risk. If you would invest  35,012  in Boston Beer on October 6, 2024 and sell it today you would lose (6,040) from holding Boston Beer or give up 17.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.2%
Values	Daily Returns

Boston Beer  vs.  Sligro Food Group

Boston Beer

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Boston Beer and Sligro Food

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

The idea behind Boston Beer and Sligro Food Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.