Correlation Between National Beverage and FLOW TRADERS
Can any of the company-specific risk be diversified away by investing in both National Beverage and FLOW TRADERS 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 FLOW TRADERS 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 FLOW TRADERS LTD, you can compare the effects of market volatilities on National Beverage and FLOW TRADERS 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 FLOW TRADERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and FLOW TRADERS.
Diversification Opportunities for National Beverage and FLOW TRADERS
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and FLOW is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of National Beverage i.e., National Beverage and FLOW TRADERS go up and down completely randomly.
Pair Corralation between National Beverage and FLOW TRADERS
Assuming the 90 days horizon National Beverage Corp is expected to generate 0.91 times more return on investment than FLOW TRADERS. However, National Beverage Corp is 1.1 times less risky than FLOW TRADERS. It trades about 0.07 of its potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.04 per unit of risk. If you would invest 3,968 in National Beverage Corp on September 3, 2024 and sell it today you would earn a total of 692.00 from holding National Beverage Corp or generate 17.44% 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. FLOW TRADERS LTD
Performance |
| Timeline |
| National Beverage Corp |
| FLOW TRADERS LTD |
National Beverage and FLOW TRADERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and FLOW TRADERS
The main advantage of trading using opposite National Beverage and FLOW TRADERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, FLOW TRADERS 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 FLOW TRADERS will offset losses from the drop in FLOW TRADERS's long position.| National Beverage vs. HK Electric Investments | National Beverage vs. United Utilities Group | National Beverage vs. United Internet AG | National Beverage vs. WisdomTree Investments |
| FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. The Goldman Sachs | FLOW TRADERS vs. The Goldman Sachs | FLOW TRADERS vs. Superior Plus Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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