Correlation Between Carlsberg and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Carlsberg 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 Carlsberg and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlsberg AS and Boston Beer, you can compare the effects of market volatilities on Carlsberg 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 Carlsberg with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg and Boston Beer.
Diversification Opportunities for Carlsberg and Boston Beer
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Carlsberg and Boston is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Carlsberg 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 Carlsberg AS 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 Carlsberg i.e., Carlsberg and Boston Beer go up and down completely randomly.
Pair Corralation between Carlsberg and Boston Beer
Assuming the 90 days horizon Carlsberg AS is expected to generate 0.47 times more return on investment than Boston Beer. However, Carlsberg AS is 2.13 times less risky than Boston Beer. It trades about 0.04 of its potential returns per unit of risk. Boston Beer is currently generating about -0.19 per unit of risk. If you would invest 2,701 in Carlsberg AS on February 26, 2024 and sell it today you would earn a total of 67.00 from holding Carlsberg AS or generate 2.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Carlsberg AS vs. Boston Beer
Performance |
Timeline |
Carlsberg AS |
Boston Beer |
Carlsberg and Boston Beer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Carlsberg and Boston Beer
The main advantage of trading using opposite Carlsberg and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlsberg 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.Carlsberg vs. Suntory Beverage Food | Carlsberg vs. Compania Cervecerias Unidas | Carlsberg vs. Heineken NV | Carlsberg vs. Anheuser Busch InBev SANV |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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