Correlation Between Urbana and 1812 Brewing

Can any of the company-specific risk be diversified away by investing in both Urbana and 1812 Brewing 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 Urbana and 1812 Brewing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Urbana and 1812 Brewing, you can compare the effects of market volatilities on Urbana and 1812 Brewing 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 Urbana with a short position of 1812 Brewing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urbana and 1812 Brewing.

Diversification Opportunities for Urbana and 1812 Brewing

0.27

Correlation Coefficient

Urbana  1812 Brewing

Modest diversification

The 3 months correlation between Urbana and 1812 is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Urbana and 1812 Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1812 Brewing and Urbana 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 Urbana are associated (or correlated) with 1812 Brewing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1812 Brewing has no effect on the direction of Urbana i.e., Urbana and 1812 Brewing go up and down completely randomly.

Pair Corralation between Urbana and 1812 Brewing

Assuming the 90 days horizon Urbana is expected to generate 599.15 times less return on investment than 1812 Brewing. But when comparing it to its historical volatility, Urbana is 141.43 times less risky than 1812 Brewing. It trades about 0.08 of its potential returns per unit of risk. 1812 Brewing is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  0.01  in 1812 Brewing on December 27, 2024 and sell it today you would earn a total of  0.00  from holding 1812 Brewing or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Urbana  vs.  1812 Brewing

Urbana

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Urbana are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Urbana may actually be approaching a critical reversion point that can send shares even higher in April 2025.

1812 Brewing

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in 1812 Brewing are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, 1812 Brewing unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Urbana and 1812 Brewing

The main advantage of trading using opposite Urbana and 1812 Brewing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urbana position performs unexpectedly, 1812 Brewing 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 1812 Brewing will offset losses from the drop in 1812 Brewing's long position.

The idea behind Urbana and 1812 Brewing 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.