Correlation Between National Beverage and NOVAGOLD RESOURCES
Can any of the company-specific risk be diversified away by investing in both National Beverage and NOVAGOLD RESOURCES 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 NOVAGOLD RESOURCES 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 NOVAGOLD RESOURCES, you can compare the effects of market volatilities on National Beverage and NOVAGOLD RESOURCES 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 NOVAGOLD RESOURCES. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and NOVAGOLD RESOURCES.
Diversification Opportunities for National Beverage and NOVAGOLD RESOURCES
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and NOVAGOLD is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and NOVAGOLD RESOURCES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVAGOLD RESOURCES 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 NOVAGOLD RESOURCES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVAGOLD RESOURCES has no effect on the direction of National Beverage i.e., National Beverage and NOVAGOLD RESOURCES go up and down completely randomly.
Pair Corralation between National Beverage and NOVAGOLD RESOURCES
Assuming the 90 days horizon National Beverage Corp is expected to under-perform the NOVAGOLD RESOURCES. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 2.09 times less risky than NOVAGOLD RESOURCES. The stock trades about -0.05 of its potential returns per unit of risk. The NOVAGOLD RESOURCES is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 317.00 in NOVAGOLD RESOURCES on September 27, 2024 and sell it today you would lose (1.00) from holding NOVAGOLD RESOURCES or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. NOVAGOLD RESOURCES
Performance |
| Timeline |
| National Beverage Corp |
| NOVAGOLD RESOURCES |
National Beverage and NOVAGOLD RESOURCES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and NOVAGOLD RESOURCES
The main advantage of trading using opposite National Beverage and NOVAGOLD RESOURCES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, NOVAGOLD RESOURCES 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 NOVAGOLD RESOURCES will offset losses from the drop in NOVAGOLD RESOURCES's long position.| National Beverage vs. The Coca Cola | National Beverage vs. Monster Beverage Corp | National Beverage vs. Keurig Dr Pepper | National Beverage vs. Coca Cola European Partners |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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