Correlation Between National Beverage and Coca-Cola Consolidated
Can any of the company-specific risk be diversified away by investing in both National Beverage and Coca-Cola Consolidated 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 Coca-Cola Consolidated 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 Coca Cola Consolidated, you can compare the effects of market volatilities on National Beverage and Coca-Cola Consolidated 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 Coca-Cola Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Coca-Cola Consolidated.
Diversification Opportunities for National Beverage and Coca-Cola Consolidated
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and Coca-Cola is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Coca Cola Consolidated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Consolidated 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 Coca-Cola Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola Consolidated has no effect on the direction of National Beverage i.e., National Beverage and Coca-Cola Consolidated go up and down completely randomly.
Pair Corralation between National Beverage and Coca-Cola Consolidated
Assuming the 90 days horizon National Beverage Corp is expected to under-perform the Coca-Cola Consolidated. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.2 times less risky than Coca-Cola Consolidated. The stock trades about -0.23 of its potential returns per unit of risk. The Coca Cola Consolidated is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 123,754 in Coca Cola Consolidated on December 3, 2024 and sell it today you would earn a total of 12,246 from holding Coca Cola Consolidated or generate 9.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Coca Cola Consolidated
Performance |
| Timeline |
| National Beverage Corp |
| Coca Cola Consolidated |
National Beverage and Coca-Cola Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Coca-Cola Consolidated
The main advantage of trading using opposite National Beverage and Coca-Cola Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Coca-Cola Consolidated 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 Coca-Cola Consolidated will offset losses from the drop in Coca-Cola Consolidated's long position.| National Beverage vs. FARM 51 GROUP | National Beverage vs. Apollo Investment Corp | National Beverage vs. Hanison Construction Holdings | National Beverage vs. MidCap Financial Investment |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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