Correlation Between National Beverage and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both National Beverage and Aedas Homes 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 Aedas Homes 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 Aedas Homes SA, you can compare the effects of market volatilities on National Beverage and Aedas Homes 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 Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Aedas Homes.
Diversification Opportunities for National Beverage and Aedas Homes
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Aedas is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA 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 Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SA has no effect on the direction of National Beverage i.e., National Beverage and Aedas Homes go up and down completely randomly.
Pair Corralation between National Beverage and Aedas Homes
Assuming the 90 days horizon National Beverage Corp is expected to generate 1.15 times more return on investment than Aedas Homes. However, National Beverage is 1.15 times more volatile than Aedas Homes SA. It trades about 0.08 of its potential returns per unit of risk. Aedas Homes SA is currently generating about 0.08 per unit of risk. If you would invest 3,894 in National Beverage Corp on September 2, 2024 and sell it today you would earn a total of 766.00 from holding National Beverage Corp or generate 19.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Aedas Homes SA
Performance |
| Timeline |
| National Beverage Corp |
| Aedas Homes SA |
National Beverage and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Aedas Homes
The main advantage of trading using opposite National Beverage and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Aedas Homes 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| National Beverage vs. PepsiCo | National Beverage vs. Superior Plus Corp | National Beverage vs. NMI Holdings | National Beverage vs. Origin Agritech |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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