Correlation Between Nomad Foods and National Beverage
Can any of the company-specific risk be diversified away by investing in both Nomad Foods 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 Nomad Foods and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomad Foods and National Beverage Corp, you can compare the effects of market volatilities on Nomad Foods 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 Nomad Foods with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomad Foods and National Beverage.
Diversification Opportunities for Nomad Foods and National Beverage
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nomad and National is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods 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 Nomad Foods 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 Nomad Foods 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 Nomad Foods i.e., Nomad Foods and National Beverage go up and down completely randomly.
Pair Corralation between Nomad Foods and National Beverage
Assuming the 90 days trading horizon Nomad Foods is expected to generate 0.72 times more return on investment than National Beverage. However, Nomad Foods is 1.39 times less risky than National Beverage. It trades about 0.04 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.02 per unit of risk. If you would invest 1,445 in Nomad Foods on September 24, 2024 and sell it today you would earn a total of 155.00 from holding Nomad Foods or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomad Foods vs. National Beverage Corp
Performance |
| Timeline |
| Nomad Foods |
| National Beverage Corp |
Nomad Foods and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomad Foods and National Beverage
The main advantage of trading using opposite Nomad Foods and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomad Foods 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.| Nomad Foods vs. Apple Inc | Nomad Foods vs. Apple Inc | Nomad Foods vs. Apple Inc | Nomad Foods vs. Apple Inc |
| National Beverage vs. LANDSEA GREEN MANAGEMENT | National Beverage vs. SLR Investment Corp | National Beverage vs. HK Electric Investments | National Beverage vs. CDL INVESTMENT |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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