Correlation Between Boston Beer and Vericel Corp

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

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

Diversification Opportunities for Boston Beer and Vericel Corp

0.41

Correlation Coefficient

Boston Beer  Vericel Corp

Very weak diversification

The 3 months correlation between Boston and Vericel is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Vericel Corp Ord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vericel Corp Ord 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 Vericel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vericel Corp Ord has no effect on the direction of Boston Beer i.e., Boston Beer and Vericel Corp go up and down completely randomly.

Pair Corralation between Boston Beer and Vericel Corp

Considering the 90-day investment horizon Boston Beer is expected to under-perform the Vericel Corp. But the stock apears to be less risky and, when comparing its historical volatility, Boston Beer is 1.24 times less risky than Vericel Corp. The stock trades about -0.01 of its potential returns per unit of risk. The Vericel Corp Ord is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,283  in Vericel Corp Ord on August 21, 2024 and sell it today you would earn a total of  3,006  from holding Vericel Corp Ord or generate 131.67% return on investment over 90 days.

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

Boston Beer  vs.  Vericel Corp Ord

Boston Beer

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Vericel Corp Ord

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vericel Corp Ord are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Vericel Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Boston Beer and Vericel Corp

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

The idea behind Boston Beer and Vericel Corp Ord 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.