Correlation Between National Beverage and Walmart
Can any of the company-specific risk be diversified away by investing in both National Beverage and Walmart 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 Walmart 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 Walmart, you can compare the effects of market volatilities on National Beverage and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Walmart.
Diversification Opportunities for National Beverage and Walmart
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Walmart is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of National Beverage i.e., National Beverage and Walmart go up and down completely randomly.
Pair Corralation between National Beverage and Walmart
Assuming the 90 days horizon National Beverage is expected to generate 5.77 times less return on investment than Walmart. In addition to that, National Beverage is 1.79 times more volatile than Walmart. It trades about 0.01 of its total potential returns per unit of risk. Walmart is currently generating about 0.13 per unit of volatility. If you would invest 4,529 in Walmart on September 3, 2024 and sell it today you would earn a total of 4,207 from holding Walmart or generate 92.89% 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. Walmart
Performance |
| Timeline |
| National Beverage Corp |
| Walmart |
National Beverage and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Walmart
The main advantage of trading using opposite National Beverage and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart'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 |
| Walmart vs. Silicon Motion Technology | Walmart vs. Soken Chemical Engineering | Walmart vs. National Beverage Corp | Walmart vs. Tsingtao Brewery |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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