Correlation Between National Beverage and LIFENET INSURANCE
Can any of the company-specific risk be diversified away by investing in both National Beverage and LIFENET INSURANCE 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 LIFENET INSURANCE 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 LIFENET INSURANCE CO, you can compare the effects of market volatilities on National Beverage and LIFENET INSURANCE 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 LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and LIFENET INSURANCE.
Diversification Opportunities for National Beverage and LIFENET INSURANCE
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and LIFENET is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE 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 LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of National Beverage i.e., National Beverage and LIFENET INSURANCE go up and down completely randomly.
Pair Corralation between National Beverage and LIFENET INSURANCE
Assuming the 90 days horizon National Beverage Corp is expected to generate 1.11 times more return on investment than LIFENET INSURANCE. However, National Beverage is 1.11 times more volatile than LIFENET INSURANCE CO. It trades about 0.2 of its potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about 0.18 per unit of risk. If you would invest 4,180 in National Beverage Corp on August 27, 2024 and sell it today you would earn a total of 320.00 from holding National Beverage Corp or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. LIFENET INSURANCE CO
Performance |
| Timeline |
| National Beverage Corp |
| LIFENET INSURANCE |
National Beverage and LIFENET INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and LIFENET INSURANCE
The main advantage of trading using opposite National Beverage and LIFENET INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, LIFENET INSURANCE 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 LIFENET INSURANCE will offset losses from the drop in LIFENET INSURANCE's long position.| National Beverage vs. FIREWEED METALS P | National Beverage vs. Kaiser Aluminum | National Beverage vs. PennyMac Mortgage Investment | National Beverage vs. Chuangs China Investments |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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