Correlation Between National Beverage and InPlay Oil
Can any of the company-specific risk be diversified away by investing in both National Beverage and InPlay Oil 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 InPlay Oil 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 InPlay Oil Corp, you can compare the effects of market volatilities on National Beverage and InPlay Oil 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 InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and InPlay Oil.
Diversification Opportunities for National Beverage and InPlay Oil
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and InPlay is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp 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 InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of National Beverage i.e., National Beverage and InPlay Oil go up and down completely randomly.
Pair Corralation between National Beverage and InPlay Oil
Assuming the 90 days horizon National Beverage Corp is expected to generate 0.65 times more return on investment than InPlay Oil. However, National Beverage Corp is 1.53 times less risky than InPlay Oil. It trades about 0.02 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.03 per unit of risk. If you would invest 4,160 in National Beverage Corp on October 15, 2024 and sell it today you would earn a total of 40.00 from holding National Beverage Corp or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. InPlay Oil Corp
Performance |
| Timeline |
| National Beverage Corp |
| InPlay Oil Corp |
National Beverage and InPlay Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and InPlay Oil
The main advantage of trading using opposite National Beverage and InPlay Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, InPlay Oil 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 InPlay Oil will offset losses from the drop in InPlay Oil's long position.| National Beverage vs. GAMESTOP | National Beverage vs. Cleanaway Waste Management | National Beverage vs. GAMING FAC SA | National Beverage vs. MOVIE GAMES SA |
| InPlay Oil vs. UNIQA INSURANCE GR | InPlay Oil vs. GRIFFIN MINING LTD | InPlay Oil vs. Cincinnati Financial Corp | InPlay Oil vs. SUN LIFE FINANCIAL |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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