Correlation Between National Beverage and Centaur Media
Can any of the company-specific risk be diversified away by investing in both National Beverage and Centaur Media 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 Centaur Media 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 Centaur Media, you can compare the effects of market volatilities on National Beverage and Centaur Media 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 Centaur Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Centaur Media.
Diversification Opportunities for National Beverage and Centaur Media
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Centaur is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media 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 Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of National Beverage i.e., National Beverage and Centaur Media go up and down completely randomly.
Pair Corralation between National Beverage and Centaur Media
Assuming the 90 days trading horizon National Beverage Corp is expected to under-perform the Centaur Media. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 3.3 times less risky than Centaur Media. The stock trades about -0.19 of its potential returns per unit of risk. The Centaur Media is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,300 in Centaur Media on November 7, 2024 and sell it today you would earn a total of 400.00 from holding Centaur Media or generate 17.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
National Beverage Corp vs. Centaur Media
Performance |
| Timeline |
| National Beverage Corp |
| Centaur Media |
National Beverage and Centaur Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Centaur Media
The main advantage of trading using opposite National Beverage and Centaur Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Centaur Media 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 Centaur Media will offset losses from the drop in Centaur Media's long position.| National Beverage vs. McEwen Mining | National Beverage vs. Coeur Mining | National Beverage vs. Beowulf Mining | National Beverage vs. Scandinavian Tobacco Group |
| Centaur Media vs. Raytheon Technologies Corp | Centaur Media vs. Charter Communications Cl | Centaur Media vs. Polar Capital Technology | Centaur Media vs. Pressure Technologies Plc |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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