Correlation Between Boston Beer and CITIGROUP

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

By analyzing existing cross correlation between Boston Beer and CITIGROUP INC 34, you can compare the effects of market volatilities on Boston Beer and CITIGROUP 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 CITIGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and CITIGROUP.

Diversification Opportunities for Boston Beer and CITIGROUP

-0.51

Correlation Coefficient

Boston Beer  CITIGROUP

Excellent diversification

The 3 months correlation between Boston and CITIGROUP is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and CITIGROUP INC 34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIGROUP INC 34 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 CITIGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIGROUP INC 34 has no effect on the direction of Boston Beer i.e., Boston Beer and CITIGROUP go up and down completely randomly.

Pair Corralation between Boston Beer and CITIGROUP

Considering the 90-day investment horizon Boston Beer is expected to generate 6.44 times more return on investment than CITIGROUP. However, Boston Beer is 6.44 times more volatile than CITIGROUP INC 34. It trades about 0.02 of its potential returns per unit of risk. CITIGROUP INC 34 is currently generating about -0.01 per unit of risk. If you would invest  30,129  in Boston Beer on September 12, 2024 and sell it today you would earn a total of  1,521  from holding Boston Beer or generate 5.05% 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.  CITIGROUP INC 34

Boston Beer

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Boston Beer displayed solid returns over the last few months and may actually be approaching a breakup point.

CITIGROUP INC 34

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIGROUP INC 34 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CITIGROUP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boston Beer and CITIGROUP

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

The idea behind Boston Beer and CITIGROUP INC 34 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.