Correlation Between Advanced Micro and National Beverage
Can any of the company-specific risk be diversified away by investing in both Advanced Micro 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 Advanced Micro and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Micro Devices and National Beverage Corp, you can compare the effects of market volatilities on Advanced Micro 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 Advanced Micro with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and National Beverage.
Diversification Opportunities for Advanced Micro and National Beverage
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Advanced and National is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices 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 Advanced Micro 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 Advanced Micro Devices 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 Advanced Micro i.e., Advanced Micro and National Beverage go up and down completely randomly.
Pair Corralation between Advanced Micro and National Beverage
Assuming the 90 days trading horizon Advanced Micro Devices is expected to under-perform the National Beverage. In addition to that, Advanced Micro is 1.59 times more volatile than National Beverage Corp. It trades about -0.35 of its total potential returns per unit of risk. National Beverage Corp is currently generating about -0.12 per unit of volatility. If you would invest 3,960 in National Beverage Corp on December 6, 2024 and sell it today you would lose (180.00) from holding National Beverage Corp or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Micro Devices vs. National Beverage Corp
Performance |
| Timeline |
| Advanced Micro Devices |
| National Beverage Corp |
Advanced Micro and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Micro and National Beverage
The main advantage of trading using opposite Advanced Micro and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro 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.| Advanced Micro vs. CANON MARKETING JP | Advanced Micro vs. GOME Retail Holdings | Advanced Micro vs. TRADEGATE | Advanced Micro vs. Tradegate AG Wertpapierhandelsbank |
| National Beverage vs. Rocket Internet SE | National Beverage vs. Office Properties Income | National Beverage vs. MAVEN WIRELESS SWEDEN | National Beverage vs. CRISPR Therapeutics AG |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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