Correlation Between National Beverage and Penn National
Can any of the company-specific risk be diversified away by investing in both National Beverage and Penn National 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 Penn National 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 Penn National Gaming, you can compare the effects of market volatilities on National Beverage and Penn National 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 Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Penn National.
Diversification Opportunities for National Beverage and Penn National
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Penn is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming 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 Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of National Beverage i.e., National Beverage and Penn National go up and down completely randomly.
Pair Corralation between National Beverage and Penn National
Assuming the 90 days horizon National Beverage Corp is expected to generate 0.71 times more return on investment than Penn National. However, National Beverage Corp is 1.42 times less risky than Penn National. It trades about 0.31 of its potential returns per unit of risk. Penn National Gaming is currently generating about 0.18 per unit of risk. If you would invest 4,120 in National Beverage Corp on September 2, 2024 and sell it today you would earn a total of 540.00 from holding National Beverage Corp or generate 13.11% 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. Penn National Gaming
Performance |
| Timeline |
| National Beverage Corp |
| Penn National Gaming |
National Beverage and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Penn National
The main advantage of trading using opposite National Beverage and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Penn National 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 Penn National will offset losses from the drop in Penn National's long position.| National Beverage vs. PepsiCo | National Beverage vs. Superior Plus Corp | National Beverage vs. NMI Holdings | National Beverage vs. Origin Agritech |
| Penn National vs. Superior Plus Corp | Penn National vs. NMI Holdings | Penn National vs. Origin Agritech | Penn National vs. SIVERS SEMICONDUCTORS AB |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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