Correlation Between National Beverage and Aker BP
Can any of the company-specific risk be diversified away by investing in both National Beverage and Aker BP 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 Aker BP 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 Aker BP ASA, you can compare the effects of market volatilities on National Beverage and Aker BP 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 Aker BP. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Aker BP.
Diversification Opportunities for National Beverage and Aker BP
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Aker is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Aker BP ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker BP 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 Aker BP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker BP ASA has no effect on the direction of National Beverage i.e., National Beverage and Aker BP go up and down completely randomly.
Pair Corralation between National Beverage and Aker BP
Assuming the 90 days trading horizon National Beverage Corp is expected to generate 1.37 times more return on investment than Aker BP. However, National Beverage is 1.37 times more volatile than Aker BP ASA. It trades about 0.25 of its potential returns per unit of risk. Aker BP ASA is currently generating about 0.07 per unit of risk. If you would invest 4,527 in National Beverage Corp on August 31, 2024 and sell it today you would earn a total of 420.00 from holding National Beverage Corp or generate 9.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
National Beverage Corp vs. Aker BP ASA
Performance |
| Timeline |
| National Beverage Corp |
| Aker BP ASA |
National Beverage and Aker BP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Aker BP
The main advantage of trading using opposite National Beverage and Aker BP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Aker BP 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 Aker BP will offset losses from the drop in Aker BP's long position.| National Beverage vs. Neometals | National Beverage vs. Coor Service Management | National Beverage vs. Aeorema Communications Plc | National Beverage vs. JLEN Environmental Assets |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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