Correlation Between National Beverage and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both National Beverage and FAST RETAIL 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 FAST RETAIL 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 FAST RETAIL ADR, you can compare the effects of market volatilities on National Beverage and FAST RETAIL 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 FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and FAST RETAIL.
Diversification Opportunities for National Beverage and FAST RETAIL
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between National and FAST is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR 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 FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of National Beverage i.e., National Beverage and FAST RETAIL go up and down completely randomly.
Pair Corralation between National Beverage and FAST RETAIL
Assuming the 90 days horizon National Beverage Corp is expected to generate 1.09 times more return on investment than FAST RETAIL. However, National Beverage is 1.09 times more volatile than FAST RETAIL ADR. It trades about 0.31 of its potential returns per unit of risk. FAST RETAIL ADR is currently generating about 0.23 per unit of risk. If you would invest 4,120 in National Beverage Corp on September 2, 2024 and sell it today you would earn a total of 540.00 from holding National Beverage Corp or generate 13.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. FAST RETAIL ADR
Performance |
| Timeline |
| National Beverage Corp |
| FAST RETAIL ADR |
National Beverage and FAST RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and FAST RETAIL
The main advantage of trading using opposite National Beverage and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, FAST RETAIL 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 FAST RETAIL will offset losses from the drop in FAST RETAIL's long position.| National Beverage vs. PepsiCo | National Beverage vs. Superior Plus Corp | National Beverage vs. NMI Holdings | National Beverage vs. Origin Agritech |
| FAST RETAIL vs. AOYAMA TRADING | FAST RETAIL vs. Superior Plus Corp | FAST RETAIL vs. NMI Holdings | FAST RETAIL vs. Origin Agritech |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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