Correlation Between National Beverage and BP Plc
Can any of the company-specific risk be diversified away by investing in both National Beverage and BP Plc 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 BP Plc 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 BP plc, you can compare the effects of market volatilities on National Beverage and BP Plc 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 BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and BP Plc.
Diversification Opportunities for National Beverage and BP Plc
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and BPE5 is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc 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 BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of National Beverage i.e., National Beverage and BP Plc go up and down completely randomly.
Pair Corralation between National Beverage and BP Plc
Assuming the 90 days horizon National Beverage Corp is expected to generate 1.3 times more return on investment than BP Plc. However, National Beverage is 1.3 times more volatile than BP plc. It trades about 0.02 of its potential returns per unit of risk. BP plc is currently generating about 0.0 per unit of risk. If you would invest 4,152 in National Beverage Corp on September 14, 2024 and sell it today you would earn a total of 328.00 from holding National Beverage Corp or generate 7.9% 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. BP plc
Performance |
| Timeline |
| National Beverage Corp |
| BP plc |
National Beverage and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and BP Plc
The main advantage of trading using opposite National Beverage and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.| National Beverage vs. Superior Plus Corp | National Beverage vs. SIVERS SEMICONDUCTORS AB | National Beverage vs. NorAm Drilling AS | National Beverage vs. Norsk Hydro ASA |
| BP Plc vs. National Beverage Corp | BP Plc vs. Charoen Pokphand Foods | BP Plc vs. Meiko Electronics Co | BP Plc vs. Arrow Electronics |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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