Correlation Between National Beverage and GoldMining
Can any of the company-specific risk be diversified away by investing in both National Beverage and GoldMining 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 GoldMining 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 GoldMining, you can compare the effects of market volatilities on National Beverage and GoldMining 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 GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and GoldMining.
Diversification Opportunities for National Beverage and GoldMining
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and GoldMining is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of National Beverage i.e., National Beverage and GoldMining go up and down completely randomly.
Pair Corralation between National Beverage and GoldMining
Assuming the 90 days trading horizon National Beverage Corp is expected to generate 0.54 times more return on investment than GoldMining. However, National Beverage Corp is 1.86 times less risky than GoldMining. It trades about 0.24 of its potential returns per unit of risk. GoldMining is currently generating about -0.16 per unit of risk. If you would invest 4,527 in National Beverage Corp on August 30, 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 | 63.64% |
| Values | Daily Returns |
National Beverage Corp vs. GoldMining
Performance |
| Timeline |
| National Beverage Corp |
| GoldMining |
National Beverage and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and GoldMining
The main advantage of trading using opposite National Beverage and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| National Beverage vs. Tungsten West PLC | National Beverage vs. Argo Group Limited | National Beverage vs. Hardide PLC | National Beverage vs. Versarien PLC |
| GoldMining vs. Ross Stores | GoldMining vs. Zoom Video Communications | GoldMining vs. Cairo Communication SpA | GoldMining vs. Dalata Hotel Group |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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