Correlation Between National Beverage and Canadian General
Can any of the company-specific risk be diversified away by investing in both National Beverage and Canadian General 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 Canadian General 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 Canadian General Investments, you can compare the effects of market volatilities on National Beverage and Canadian General 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 Canadian General. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Canadian General.
Diversification Opportunities for National Beverage and Canadian General
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and Canadian is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Canadian General Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian General Inv 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 Canadian General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian General Inv has no effect on the direction of National Beverage i.e., National Beverage and Canadian General go up and down completely randomly.
Pair Corralation between National Beverage and Canadian General
Assuming the 90 days trading horizon National Beverage Corp is expected to under-perform the Canadian General. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.59 times less risky than Canadian General. The stock trades about -0.07 of its potential returns per unit of risk. The Canadian General Investments is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 226,000 in Canadian General Investments on November 1, 2024 and sell it today you would earn a total of 7,000 from holding Canadian General Investments or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Canadian General Investments
Performance |
| Timeline |
| National Beverage Corp |
| Canadian General Inv |
National Beverage and Canadian General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Canadian General
The main advantage of trading using opposite National Beverage and Canadian General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Canadian General 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 Canadian General will offset losses from the drop in Canadian General's long position.| National Beverage vs. Compagnie Plastic Omnium | National Beverage vs. Compal Electronics GDR | National Beverage vs. Arrow Electronics | National Beverage vs. Bloomsbury Publishing Plc |
| Canadian General vs. Costco Wholesale Corp | Canadian General vs. Indutrade AB | Canadian General vs. Ondine Biomedical | Canadian General vs. National Beverage Corp |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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