Correlation Between Boston Beer and Frontier Communications

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

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

Diversification Opportunities for Boston Beer and Frontier Communications

0.0

Correlation Coefficient

Boston Beer  Frontier Communications

Pay attention - limited upside

The 3 months correlation between Boston and Frontier is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Frontier Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Communications 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 Frontier Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Communications has no effect on the direction of Boston Beer i.e., Boston Beer and Frontier Communications go up and down completely randomly.

Pair Corralation between Boston Beer and Frontier Communications

If you would invest (100.00) in Frontier Communications on February 2, 2024 and sell it today you would earn a total of  100.00  from holding Frontier Communications or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Boston Beer  vs.  Frontier Communications

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Frontier Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontier Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Frontier Communications is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Boston Beer and Frontier Communications

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

The idea behind Boston Beer and Frontier Communications 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.