Correlation Between Scientific Games and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Scientific Games and Boston Beer 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 Scientific Games and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scientific Games and The Boston Beer, you can compare the effects of market volatilities on Scientific Games and Boston Beer 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 Scientific Games with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scientific Games and Boston Beer.
Diversification Opportunities for Scientific Games and Boston Beer
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Scientific and Boston is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and The Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Scientific Games 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 Scientific Games are associated (or correlated) with Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Scientific Games i.e., Scientific Games and Boston Beer go up and down completely randomly.
Pair Corralation between Scientific Games and Boston Beer
Assuming the 90 days horizon Scientific Games is expected to generate 1.28 times more return on investment than Boston Beer. However, Scientific Games is 1.28 times more volatile than The Boston Beer. It trades about 0.11 of its potential returns per unit of risk. The Boston Beer is currently generating about -0.27 per unit of risk. If you would invest 8,250 in Scientific Games on December 24, 2024 and sell it today you would earn a total of 1,250 from holding Scientific Games or generate 15.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Scientific Games vs. The Boston Beer
Performance |
Timeline |
Scientific Games |
Boston Beer |
Scientific Games and Boston Beer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Scientific Games and Boston Beer
The main advantage of trading using opposite Scientific Games and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scientific Games position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.Scientific Games vs. Soken Chemical Engineering | Scientific Games vs. China Railway Construction | Scientific Games vs. Sekisui Chemical Co | Scientific Games vs. Mitsui Chemicals |
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Check out your portfolio center.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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