Correlation Between Boston Beer and Utz Brands

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

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

Diversification Opportunities for Boston Beer and Utz Brands

0.84

Correlation Coefficient

Boston Beer  Utz Brands

Very poor diversification

The 3 months correlation between Boston and Utz is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Utz Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utz Brands 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 Utz Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utz Brands has no effect on the direction of Boston Beer i.e., Boston Beer and Utz Brands go up and down completely randomly.

Pair Corralation between Boston Beer and Utz Brands

Considering the 90-day investment horizon Boston Beer is expected to under-perform the Utz Brands. In addition to that, Boston Beer is 1.03 times more volatile than Utz Brands. It trades about -0.2 of its total potential returns per unit of risk. Utz Brands is currently generating about -0.1 per unit of volatility. If you would invest  1,557  in Utz Brands on December 27, 2024 and sell it today you would lose (178.00) from holding Utz Brands or give up 11.43% of portfolio value over 90 days.

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

Boston Beer  vs.  Utz Brands

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.

Utz Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Utz Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Boston Beer and Utz Brands

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

The idea behind Boston Beer and Utz Brands 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.