Correlation Between Edita Food and National Beverage
Can any of the company-specific risk be diversified away by investing in both Edita Food 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 Edita Food and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edita Food Industries and National Beverage Corp, you can compare the effects of market volatilities on Edita Food 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 Edita Food with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edita Food and National Beverage.
Diversification Opportunities for Edita Food and National Beverage
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Edita and National is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Edita Food Industries 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 Edita Food 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 Edita Food Industries 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 Edita Food i.e., Edita Food and National Beverage go up and down completely randomly.
Pair Corralation between Edita Food and National Beverage
Assuming the 90 days trading horizon Edita Food is expected to generate 2.53 times less return on investment than National Beverage. But when comparing it to its historical volatility, Edita Food Industries is 1.42 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 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,959 in National Beverage Corp on August 30, 2024 and sell it today you would lose (12.00) from holding National Beverage Corp or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 87.53% |
| Values | Daily Returns |
Edita Food Industries vs. National Beverage Corp
Performance |
| Timeline |
| Edita Food Industries |
| National Beverage Corp |
Edita Food and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edita Food and National Beverage
The main advantage of trading using opposite Edita Food and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edita Food 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.| Edita Food vs. Chocoladefabriken Lindt Spruengli | Edita Food vs. National Atomic Co | Edita Food vs. OTP Bank Nyrt | Edita Food vs. Samsung Electronics Co |
| National Beverage vs. Tungsten West PLC | National Beverage vs. Argo Group Limited | National Beverage vs. Hardide PLC | National Beverage vs. Versarien PLC |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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