Correlation Between National Beverage and CSL
Can any of the company-specific risk be diversified away by investing in both National Beverage and CSL 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 CSL 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 CSL LTD SPONADR, you can compare the effects of market volatilities on National Beverage and CSL 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 CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and CSL.
Diversification Opportunities for National Beverage and CSL
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and CSL is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and CSL LTD SPONADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL LTD SPONADR 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 CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL LTD SPONADR has no effect on the direction of National Beverage i.e., National Beverage and CSL go up and down completely randomly.
Pair Corralation between National Beverage and CSL
Assuming the 90 days horizon National Beverage is expected to generate 2.07 times less return on investment than CSL. In addition to that, National Beverage is 1.34 times more volatile than CSL LTD SPONADR. It trades about 0.01 of its total potential returns per unit of risk. CSL LTD SPONADR is currently generating about 0.04 per unit of volatility. If you would invest 7,486 in CSL LTD SPONADR on October 11, 2024 and sell it today you would earn a total of 964.00 from holding CSL LTD SPONADR or generate 12.88% 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. CSL LTD SPONADR
Performance |
| Timeline |
| National Beverage Corp |
| CSL LTD SPONADR |
National Beverage and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and CSL
The main advantage of trading using opposite National Beverage and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.| National Beverage vs. Superior Plus Corp | National Beverage vs. NMI Holdings | National Beverage vs. SIVERS SEMICONDUCTORS AB | National Beverage vs. Talanx AG |
| CSL vs. COLUMBIA SPORTSWEAR | CSL vs. PARKEN Sport Entertainment | CSL vs. Shenandoah Telecommunications | CSL vs. DICKS Sporting Goods |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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