Correlation Between National Beverage and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both National Beverage and ETFS Coffee 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 ETFS Coffee 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 ETFS Coffee ETC, you can compare the effects of market volatilities on National Beverage and ETFS Coffee 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 ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and ETFS Coffee.
Diversification Opportunities for National Beverage and ETFS Coffee
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and ETFS is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and ETFS Coffee ETC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Coffee ETC 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 ETFS Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Coffee ETC has no effect on the direction of National Beverage i.e., National Beverage and ETFS Coffee go up and down completely randomly.
Pair Corralation between National Beverage and ETFS Coffee
Assuming the 90 days horizon National Beverage Corp is expected to generate 1.08 times more return on investment than ETFS Coffee. However, National Beverage is 1.08 times more volatile than ETFS Coffee ETC. It trades about 0.08 of its potential returns per unit of risk. ETFS Coffee ETC is currently generating about -0.19 per unit of risk. If you would invest 3,620 in National Beverage Corp on January 18, 2025 and sell it today you would earn a total of 140.00 from holding National Beverage Corp or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. ETFS Coffee ETC
Performance |
| Timeline |
| National Beverage Corp |
| ETFS Coffee ETC |
National Beverage and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and ETFS Coffee
The main advantage of trading using opposite National Beverage and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, ETFS Coffee 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 ETFS Coffee will offset losses from the drop in ETFS Coffee's long position.| National Beverage vs. The Coca Cola | National Beverage vs. PepsiCo | National Beverage vs. Monster Beverage Corp | National Beverage vs. Keurig Dr Pepper |
| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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