Correlation Between DFS Furniture and National Beverage
Can any of the company-specific risk be diversified away by investing in both DFS Furniture 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 DFS Furniture and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and National Beverage Corp, you can compare the effects of market volatilities on DFS Furniture 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 DFS Furniture with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and National Beverage.
Diversification Opportunities for DFS Furniture and National Beverage
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DFS and National is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC 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 DFS Furniture 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 DFS Furniture PLC 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 DFS Furniture i.e., DFS Furniture and National Beverage go up and down completely randomly.
Pair Corralation between DFS Furniture and National Beverage
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 1.36 times more return on investment than National Beverage. However, DFS Furniture is 1.36 times more volatile than National Beverage Corp. It trades about 0.05 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.03 per unit of risk. If you would invest 122.00 in DFS Furniture PLC on September 3, 2024 and sell it today you would earn a total of 39.00 from holding DFS Furniture PLC or generate 31.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. National Beverage Corp
Performance |
| Timeline |
| DFS Furniture PLC |
| National Beverage Corp |
DFS Furniture and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and National Beverage
The main advantage of trading using opposite DFS Furniture and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture 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.| DFS Furniture vs. ASURE SOFTWARE | DFS Furniture vs. Magic Software Enterprises | DFS Furniture vs. Axway Software SA | DFS Furniture vs. Lion Biotechnologies |
| National Beverage vs. HK Electric Investments | National Beverage vs. United Utilities Group | National Beverage vs. United Internet AG | National Beverage vs. WisdomTree Investments |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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