Correlation Between Edinburgh Investment and National Beverage
Can any of the company-specific risk be diversified away by investing in both Edinburgh Investment 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 Edinburgh Investment and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edinburgh Investment Trust and National Beverage Corp, you can compare the effects of market volatilities on Edinburgh Investment 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 Edinburgh Investment with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edinburgh Investment and National Beverage.
Diversification Opportunities for Edinburgh Investment and National Beverage
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Edinburgh and National is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Edinburgh Investment Trust 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 Edinburgh Investment 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 Edinburgh Investment Trust 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 Edinburgh Investment i.e., Edinburgh Investment and National Beverage go up and down completely randomly.
Pair Corralation between Edinburgh Investment and National Beverage
Assuming the 90 days trading horizon Edinburgh Investment Trust is expected to generate 0.43 times more return on investment than National Beverage. However, Edinburgh Investment Trust is 2.31 times less risky than National Beverage. It trades about 0.01 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.04 per unit of risk. If you would invest 75,287 in Edinburgh Investment Trust on November 2, 2024 and sell it today you would earn a total of 123.00 from holding Edinburgh Investment Trust or generate 0.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.06% |
| Values | Daily Returns |
Edinburgh Investment Trust vs. National Beverage Corp
Performance |
| Timeline |
| Edinburgh Investment |
| National Beverage Corp |
Edinburgh Investment and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edinburgh Investment and National Beverage
The main advantage of trading using opposite Edinburgh Investment and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edinburgh Investment 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.| Edinburgh Investment vs. Vitec Software Group | Edinburgh Investment vs. Host Hotels Resorts | Edinburgh Investment vs. DFS Furniture PLC | Edinburgh Investment vs. Pets at Home |
| National Beverage vs. LBG Media PLC | National Beverage vs. Catalyst Media Group | National Beverage vs. Liberty Media Corp | National Beverage vs. Canadian General 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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