Correlation Between National Beverage and RETAIL FOOD
Can any of the company-specific risk be diversified away by investing in both National Beverage and RETAIL FOOD 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 RETAIL FOOD 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 RETAIL FOOD GROUP, you can compare the effects of market volatilities on National Beverage and RETAIL FOOD 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 RETAIL FOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and RETAIL FOOD.
Diversification Opportunities for National Beverage and RETAIL FOOD
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and RETAIL is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and RETAIL FOOD GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RETAIL FOOD GROUP 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 RETAIL FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RETAIL FOOD GROUP has no effect on the direction of National Beverage i.e., National Beverage and RETAIL FOOD go up and down completely randomly.
Pair Corralation between National Beverage and RETAIL FOOD
Assuming the 90 days horizon National Beverage Corp is expected to under-perform the RETAIL FOOD. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 2.37 times less risky than RETAIL FOOD. The stock trades about -0.15 of its potential returns per unit of risk. The RETAIL FOOD GROUP is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 118.00 in RETAIL FOOD GROUP on November 29, 2024 and sell it today you would earn a total of 8.00 from holding RETAIL FOOD GROUP or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. RETAIL FOOD GROUP
Performance |
| Timeline |
| National Beverage Corp |
| RETAIL FOOD GROUP |
National Beverage and RETAIL FOOD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and RETAIL FOOD
The main advantage of trading using opposite National Beverage and RETAIL FOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, RETAIL FOOD 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 RETAIL FOOD will offset losses from the drop in RETAIL FOOD's 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 |
| RETAIL FOOD vs. BG Foods | RETAIL FOOD vs. BOSTON BEER A | RETAIL FOOD vs. Thai Beverage Public | RETAIL FOOD vs. Maple Leaf Foods |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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