Correlation Between National Beverage and SIMS METAL
Can any of the company-specific risk be diversified away by investing in both National Beverage and SIMS METAL 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 SIMS METAL 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 SIMS METAL MGT, you can compare the effects of market volatilities on National Beverage and SIMS METAL 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 SIMS METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and SIMS METAL.
Diversification Opportunities for National Beverage and SIMS METAL
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and SIMS is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and SIMS METAL MGT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS METAL MGT 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 SIMS METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMS METAL MGT has no effect on the direction of National Beverage i.e., National Beverage and SIMS METAL go up and down completely randomly.
Pair Corralation between National Beverage and SIMS METAL
Assuming the 90 days horizon National Beverage Corp is expected to generate 0.93 times more return on investment than SIMS METAL. However, National Beverage Corp is 1.07 times less risky than SIMS METAL. It trades about 0.01 of its potential returns per unit of risk. SIMS METAL MGT is currently generating about 0.01 per unit of risk. If you would invest 4,423 in National Beverage Corp on September 2, 2024 and sell it today you would earn a total of 237.00 from holding National Beverage Corp or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. SIMS METAL MGT
Performance |
| Timeline |
| National Beverage Corp |
| SIMS METAL MGT |
National Beverage and SIMS METAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and SIMS METAL
The main advantage of trading using opposite National Beverage and SIMS METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, SIMS METAL 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 SIMS METAL will offset losses from the drop in SIMS METAL's long position.| National Beverage vs. PepsiCo | National Beverage vs. Superior Plus Corp | National Beverage vs. NMI Holdings | National Beverage vs. Origin Agritech |
| SIMS METAL vs. GFL ENVIRONM | SIMS METAL vs. Charter Communications | SIMS METAL vs. NIPPON STEEL SPADR | SIMS METAL vs. Entravision Communications |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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