Correlation Between National Beverage and Wheaton Precious
Can any of the company-specific risk be diversified away by investing in both National Beverage and Wheaton Precious 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 Wheaton Precious 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 Wheaton Precious Metals, you can compare the effects of market volatilities on National Beverage and Wheaton Precious 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 Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Wheaton Precious.
Diversification Opportunities for National Beverage and Wheaton Precious
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and Wheaton is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals 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 Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of National Beverage i.e., National Beverage and Wheaton Precious go up and down completely randomly.
Pair Corralation between National Beverage and Wheaton Precious
Assuming the 90 days trading horizon National Beverage is expected to generate 1.64 times less return on investment than Wheaton Precious. In addition to that, National Beverage is 1.61 times more volatile than Wheaton Precious Metals. It trades about 0.02 of its total potential returns per unit of risk. Wheaton Precious Metals is currently generating about 0.05 per unit of volatility. If you would invest 317,254 in Wheaton Precious Metals on August 27, 2024 and sell it today you would earn a total of 190,746 from holding Wheaton Precious Metals or generate 60.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.25% |
| Values | Daily Returns |
National Beverage Corp vs. Wheaton Precious Metals
Performance |
| Timeline |
| National Beverage Corp |
| Wheaton Precious Metals |
National Beverage and Wheaton Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Wheaton Precious
The main advantage of trading using opposite National Beverage and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Wheaton Precious 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 Wheaton Precious will offset losses from the drop in Wheaton Precious' long position.| National Beverage vs. Bellevue Healthcare Trust | National Beverage vs. Inspiration Healthcare Group | National Beverage vs. Universal Health Services | National Beverage vs. Naturhouse Health SA |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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