Correlation Between National Beverage and Flowers Foods
Can any of the company-specific risk be diversified away by investing in both National Beverage and Flowers Foods 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 Flowers Foods 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 Flowers Foods, you can compare the effects of market volatilities on National Beverage and Flowers Foods 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 Flowers Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Flowers Foods.
Diversification Opportunities for National Beverage and Flowers Foods
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between National and Flowers is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Flowers Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowers Foods 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 Flowers Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowers Foods has no effect on the direction of National Beverage i.e., National Beverage and Flowers Foods go up and down completely randomly.
Pair Corralation between National Beverage and Flowers Foods
Assuming the 90 days horizon National Beverage Corp is expected to generate 1.01 times more return on investment than Flowers Foods. However, National Beverage is 1.01 times more volatile than Flowers Foods. It trades about -0.07 of its potential returns per unit of risk. Flowers Foods is currently generating about -0.14 per unit of risk. If you would invest 3,980 in National Beverage Corp on November 28, 2024 and sell it today you would lose (100.00) from holding National Beverage Corp or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Flowers Foods
Performance |
| Timeline |
| National Beverage Corp |
| Flowers Foods |
National Beverage and Flowers Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Flowers Foods
The main advantage of trading using opposite National Beverage and Flowers Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Flowers Foods 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 Flowers Foods will offset losses from the drop in Flowers Foods' long position.| National Beverage vs. BC TECHNOLOGY GROUP | National Beverage vs. Boyd Gaming | National Beverage vs. X FAB Silicon Foundries | National Beverage vs. BAKED GAMES SA |
| Flowers Foods vs. MagnaChip Semiconductor Corp | Flowers Foods vs. UNITED UTILITIES GP | Flowers Foods vs. Jupiter Fund Management | Flowers Foods vs. CEOTRONICS |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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