Correlation Between 191216DC1 and Boston Beer

Can any of the company-specific risk be diversified away by investing in both 191216DC1 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 191216DC1 and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COCA COLA CO and Boston Beer, you can compare the effects of market volatilities on 191216DC1 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 191216DC1 with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of 191216DC1 and Boston Beer.

Diversification Opportunities for 191216DC1 and Boston Beer

-0.34

Correlation Coefficient

191216DC1  Boston Beer

Very good diversification

The 3 months correlation between 191216DC1 and Boston is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding COCA COLA CO and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and 191216DC1 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 COCA COLA CO 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 191216DC1 i.e., 191216DC1 and Boston Beer go up and down completely randomly.

Pair Corralation between 191216DC1 and Boston Beer

Assuming the 90 days trading horizon COCA COLA CO is expected to generate 1.2 times more return on investment than Boston Beer. However, 191216DC1 is 1.2 times more volatile than Boston Beer. It trades about 0.06 of its potential returns per unit of risk. Boston Beer is currently generating about -0.06 per unit of risk. If you would invest  6,448  in COCA COLA CO on October 13, 2024 and sell it today you would earn a total of  446.00  from holding COCA COLA CO or generate 6.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

COCA COLA CO  vs.  Boston Beer

COCA A CO

Risk-Adjusted Performance

5 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COCA COLA CO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, 191216DC1 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Boston Beer

Risk-Adjusted Performance

0 of 100

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 latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with 191216DC1 and Boston Beer

The main advantage of trading using opposite 191216DC1 and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 191216DC1 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.

The idea behind COCA COLA CO and Boston Beer 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.