Correlation Between National Beverage and Lerøy Seafood
Can any of the company-specific risk be diversified away by investing in both National Beverage and Lerøy Seafood 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 Lerøy Seafood 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 Lery Seafood Group, you can compare the effects of market volatilities on National Beverage and Lerøy Seafood 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 Lerøy Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Lerøy Seafood.
Diversification Opportunities for National Beverage and Lerøy Seafood
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Lerøy is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Lery Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lery Seafood Group 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 Lerøy Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lery Seafood Group has no effect on the direction of National Beverage i.e., National Beverage and Lerøy Seafood go up and down completely randomly.
Pair Corralation between National Beverage and Lerøy Seafood
Assuming the 90 days horizon National Beverage is expected to generate 12.85 times less return on investment than Lerøy Seafood. But when comparing it to its historical volatility, National Beverage Corp is 3.98 times less risky than Lerøy Seafood. It trades about 0.02 of its potential returns per unit of risk. Lery Seafood Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 160.00 in Lery Seafood Group on September 14, 2024 and sell it today you would earn a total of 274.00 from holding Lery Seafood Group or generate 171.25% 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. Lery Seafood Group
Performance |
| Timeline |
| National Beverage Corp |
| Lery Seafood Group |
National Beverage and Lerøy Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Lerøy Seafood
The main advantage of trading using opposite National Beverage and Lerøy Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Lerøy Seafood 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 Lerøy Seafood will offset losses from the drop in Lerøy Seafood's long position.| National Beverage vs. Superior Plus Corp | National Beverage vs. SIVERS SEMICONDUCTORS AB | National Beverage vs. NorAm Drilling AS | National Beverage vs. Norsk Hydro ASA |
| Lerøy Seafood vs. Hormel Foods | Lerøy Seafood vs. Superior Plus Corp | Lerøy Seafood vs. SIVERS SEMICONDUCTORS AB | Lerøy Seafood vs. NorAm Drilling AS |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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