Correlation Between National Beverage and International Flavors
Can any of the company-specific risk be diversified away by investing in both National Beverage and International Flavors 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 International Flavors 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 International Flavors Fragrances, you can compare the effects of market volatilities on National Beverage and International Flavors 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 International Flavors. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and International Flavors.
Diversification Opportunities for National Beverage and International Flavors
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between National and International is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and International Flavors Fragranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Flavors 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 International Flavors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Flavors has no effect on the direction of National Beverage i.e., National Beverage and International Flavors go up and down completely randomly.
Pair Corralation between National Beverage and International Flavors
Assuming the 90 days horizon National Beverage Corp is expected to generate 0.94 times more return on investment than International Flavors. However, National Beverage Corp is 1.06 times less risky than International Flavors. It trades about 0.01 of its potential returns per unit of risk. International Flavors Fragrances is currently generating about 0.0 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. International Flavors Fragranc
Performance |
| Timeline |
| National Beverage Corp |
| International Flavors |
National Beverage and International Flavors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and International Flavors
The main advantage of trading using opposite National Beverage and International Flavors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, International Flavors 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 International Flavors will offset losses from the drop in International Flavors' long position.| National Beverage vs. PepsiCo | National Beverage vs. Superior Plus Corp | National Beverage vs. NMI Holdings | National Beverage vs. Origin Agritech |
| International Flavors vs. THRACE PLASTICS | International Flavors vs. Tower One Wireless | International Flavors vs. Cogent Communications Holdings | International Flavors vs. SANOK RUBBER ZY |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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