Correlation Between National Beverage and Ambea AB
Can any of the company-specific risk be diversified away by investing in both National Beverage and Ambea AB 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 Ambea AB 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 Ambea AB, you can compare the effects of market volatilities on National Beverage and Ambea AB 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 Ambea AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Ambea AB.
Diversification Opportunities for National Beverage and Ambea AB
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Ambea is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Ambea AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambea AB 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 Ambea AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambea AB has no effect on the direction of National Beverage i.e., National Beverage and Ambea AB go up and down completely randomly.
Pair Corralation between National Beverage and Ambea AB
Assuming the 90 days horizon National Beverage Corp is expected to under-perform the Ambea AB. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.57 times less risky than Ambea AB. The stock trades about -0.21 of its potential returns per unit of risk. The Ambea AB is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 832.00 in Ambea AB on October 24, 2024 and sell it today you would lose (32.00) from holding Ambea AB or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Ambea AB
Performance |
| Timeline |
| National Beverage Corp |
| Ambea AB |
National Beverage and Ambea AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Ambea AB
The main advantage of trading using opposite National Beverage and Ambea AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Ambea AB 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 Ambea AB will offset losses from the drop in Ambea AB's long position.| National Beverage vs. Fair Isaac Corp | National Beverage vs. X FAB Silicon Foundries | National Beverage vs. Alaska Air Group | National Beverage vs. DXC Technology Co |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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