Correlation Between Magnora ASA and National Beverage
Can any of the company-specific risk be diversified away by investing in both Magnora ASA and National Beverage 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 Magnora ASA and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnora ASA and National Beverage Corp, you can compare the effects of market volatilities on Magnora ASA and National Beverage 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 Magnora ASA with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnora ASA and National Beverage.
Diversification Opportunities for Magnora ASA and National Beverage
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Magnora and National is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Magnora ASA and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and Magnora ASA 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 Magnora ASA are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Magnora ASA i.e., Magnora ASA and National Beverage go up and down completely randomly.
Pair Corralation between Magnora ASA and National Beverage
Assuming the 90 days trading horizon Magnora ASA is expected to generate 1.47 times more return on investment than National Beverage. However, Magnora ASA is 1.47 times more volatile than National Beverage Corp. It trades about 0.23 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.19 per unit of risk. If you would invest 2,245 in Magnora ASA on September 3, 2024 and sell it today you would earn a total of 260.00 from holding Magnora ASA or generate 11.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnora ASA vs. National Beverage Corp
Performance |
| Timeline |
| Magnora ASA |
| National Beverage Corp |
Magnora ASA and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnora ASA and National Beverage
The main advantage of trading using opposite Magnora ASA and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnora ASA position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| Magnora ASA vs. Catalyst Media Group | Magnora ASA vs. CATLIN GROUP | Magnora ASA vs. RTW Venture Fund | Magnora ASA vs. Secure Property Development |
| National Beverage vs. Catalyst Media Group | National Beverage vs. CATLIN GROUP | National Beverage vs. Magnora ASA | National Beverage vs. RTW Venture Fund |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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