Correlation Between Boston Beer and Simply Good

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

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

Diversification Opportunities for Boston Beer and Simply Good

0.5

Correlation Coefficient

Boston Beer  Simply Good

Very weak diversification

The 3 months correlation between Boston and Simply is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Simply Good Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Good Foods 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 Simply Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Good Foods has no effect on the direction of Boston Beer i.e., Boston Beer and Simply Good go up and down completely randomly.

Pair Corralation between Boston Beer and Simply Good

Considering the 90-day investment horizon Boston Beer is expected to under-perform the Simply Good. But the stock apears to be less risky and, when comparing its historical volatility, Boston Beer is 1.03 times less risky than Simply Good. The stock trades about -0.17 of its potential returns per unit of risk. The Simply Good Foods is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  3,872  in Simply Good Foods on December 28, 2024 and sell it today you would lose (432.00) from holding Simply Good Foods or give up 11.16% of portfolio value over 90 days.

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

Boston Beer  vs.  Simply Good Foods

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.

Simply Good Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simply Good Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Boston Beer and Simply Good

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

The idea behind Boston Beer and Simply Good Foods 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.