Correlation Between National Beverage and Smithson Investment
Can any of the company-specific risk be diversified away by investing in both National Beverage and Smithson Investment 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 Smithson Investment 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 Smithson Investment Trust, you can compare the effects of market volatilities on National Beverage and Smithson Investment 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 Smithson Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Smithson Investment.
Diversification Opportunities for National Beverage and Smithson Investment
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Smithson is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Smithson Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smithson Investment Trust 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 Smithson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smithson Investment Trust has no effect on the direction of National Beverage i.e., National Beverage and Smithson Investment go up and down completely randomly.
Pair Corralation between National Beverage and Smithson Investment
Assuming the 90 days trading horizon National Beverage Corp is expected to under-perform the Smithson Investment. In addition to that, National Beverage is 1.76 times more volatile than Smithson Investment Trust. It trades about -0.07 of its total potential returns per unit of risk. Smithson Investment Trust is currently generating about 0.09 per unit of volatility. If you would invest 140,400 in Smithson Investment Trust on November 7, 2024 and sell it today you would earn a total of 13,600 from holding Smithson Investment Trust or generate 9.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
National Beverage Corp vs. Smithson Investment Trust
Performance |
| Timeline |
| National Beverage Corp |
| Smithson Investment Trust |
National Beverage and Smithson Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Smithson Investment
The main advantage of trading using opposite National Beverage and Smithson Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Smithson Investment 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 Smithson Investment will offset losses from the drop in Smithson Investment's long position.| National Beverage vs. Samsung Electronics Co | National Beverage vs. Samsung Electronics Co | National Beverage vs. Toyota Motor Corp | National Beverage vs. Reliance Industries Ltd |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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