Correlation Between National Beverage and Tomra Systems
Can any of the company-specific risk be diversified away by investing in both National Beverage and Tomra Systems 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 National Beverage and Tomra Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Tomra Systems ASA, you can compare the effects of market volatilities on National Beverage and Tomra Systems 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 National Beverage with a short position of Tomra Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Tomra Systems.
Diversification Opportunities for National Beverage and Tomra Systems
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Tomra is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Tomra Systems ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tomra Systems ASA and National Beverage 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 National Beverage Corp are associated (or correlated) with Tomra Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tomra Systems ASA has no effect on the direction of National Beverage i.e., National Beverage and Tomra Systems go up and down completely randomly.
Pair Corralation between National Beverage and Tomra Systems
Assuming the 90 days trading horizon National Beverage Corp is expected to generate 0.56 times more return on investment than Tomra Systems. However, National Beverage Corp is 1.78 times less risky than Tomra Systems. It trades about 0.26 of its potential returns per unit of risk. Tomra Systems ASA is currently generating about 0.03 per unit of risk. If you would invest 4,510 in National Beverage Corp on September 1, 2024 and sell it today you would earn a total of 452.00 from holding National Beverage Corp or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
National Beverage Corp vs. Tomra Systems ASA
Performance |
| Timeline |
| National Beverage Corp |
| Tomra Systems ASA |
National Beverage and Tomra Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Tomra Systems
The main advantage of trading using opposite National Beverage and Tomra Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Tomra Systems 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 Tomra Systems will offset losses from the drop in Tomra Systems' long position.| National Beverage vs. Melia Hotels | National Beverage vs. Fevertree Drinks Plc | National Beverage vs. JB Hunt Transport | National Beverage vs. PPHE Hotel Group |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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