Correlation Between Peloton Interactive and National Beverage
Can any of the company-specific risk be diversified away by investing in both Peloton Interactive and National Beverage 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 Peloton Interactive and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peloton Interactive and National Beverage Corp, you can compare the effects of market volatilities on Peloton Interactive and National Beverage 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 Peloton Interactive with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peloton Interactive and National Beverage.
Diversification Opportunities for Peloton Interactive and National Beverage
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Peloton and National is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Peloton Interactive and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and Peloton Interactive 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 Peloton Interactive are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Peloton Interactive i.e., Peloton Interactive and National Beverage go up and down completely randomly.
Pair Corralation between Peloton Interactive and National Beverage
Assuming the 90 days horizon Peloton Interactive is expected to generate 3.05 times more return on investment than National Beverage. However, Peloton Interactive is 3.05 times more volatile than National Beverage Corp. It trades about 0.02 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.02 per unit of risk. If you would invest 1,172 in Peloton Interactive on August 30, 2024 and sell it today you would lose (252.00) from holding Peloton Interactive or give up 21.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peloton Interactive vs. National Beverage Corp
Performance |
| Timeline |
| Peloton Interactive |
| National Beverage Corp |
Peloton Interactive and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peloton Interactive and National Beverage
The main advantage of trading using opposite Peloton Interactive and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peloton Interactive position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| Peloton Interactive vs. ADRIATIC METALS LS 013355 | Peloton Interactive vs. SENECA FOODS A | Peloton Interactive vs. Corporate Office Properties | Peloton Interactive vs. US FOODS HOLDING |
| National Beverage vs. Superior Plus Corp | National Beverage vs. SIVERS SEMICONDUCTORS AB | National Beverage vs. Talanx AG | National Beverage vs. 2G ENERGY |
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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