Correlation Between Boston Beer and Arconic

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

By analyzing existing cross correlation between Boston Beer and Arconic 59 percent, you can compare the effects of market volatilities on Boston Beer and Arconic 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 Arconic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Arconic.

Diversification Opportunities for Boston Beer and Arconic

-0.16

Correlation Coefficient

Boston Beer  Arconic

Good diversification

The 3 months correlation between Boston and Arconic is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Arconic 59 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arconic 59 percent 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 Arconic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arconic 59 percent has no effect on the direction of Boston Beer i.e., Boston Beer and Arconic go up and down completely randomly.

Pair Corralation between Boston Beer and Arconic

Considering the 90-day investment horizon Boston Beer is expected to under-perform the Arconic. In addition to that, Boston Beer is 6.28 times more volatile than Arconic 59 percent. It trades about -0.17 of its total potential returns per unit of risk. Arconic 59 percent is currently generating about 0.03 per unit of volatility. If you would invest  10,210  in Arconic 59 percent on December 29, 2024 and sell it today you would earn a total of  58.00  from holding Arconic 59 percent or generate 0.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Boston Beer  vs.  Arconic 59 percent

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.

Arconic 59 percent

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arconic 59 percent are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Arconic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boston Beer and Arconic

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

The idea behind Boston Beer and Arconic 59 percent 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.