Correlation Between Ecclesiastical Insurance and National Beverage
Can any of the company-specific risk be diversified away by investing in both Ecclesiastical Insurance 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 Ecclesiastical Insurance and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecclesiastical Insurance Office and National Beverage Corp, you can compare the effects of market volatilities on Ecclesiastical Insurance 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 Ecclesiastical Insurance with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecclesiastical Insurance and National Beverage.
Diversification Opportunities for Ecclesiastical Insurance and National Beverage
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecclesiastical and National is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ecclesiastical Insurance Offic 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 Ecclesiastical Insurance 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 Ecclesiastical Insurance Office 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 Ecclesiastical Insurance i.e., Ecclesiastical Insurance and National Beverage go up and down completely randomly.
Pair Corralation between Ecclesiastical Insurance and National Beverage
Assuming the 90 days trading horizon Ecclesiastical Insurance Office is expected to generate 0.75 times more return on investment than National Beverage. However, Ecclesiastical Insurance Office is 1.33 times less risky than National Beverage. It trades about 0.0 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.25 per unit of risk. If you would invest 13,150 in Ecclesiastical Insurance Office on October 21, 2024 and sell it today you would earn a total of 0.00 from holding Ecclesiastical Insurance Office or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Ecclesiastical Insurance Offic vs. National Beverage Corp
Performance |
| Timeline |
| Ecclesiastical Insurance |
| National Beverage Corp |
Ecclesiastical Insurance and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecclesiastical Insurance and National Beverage
The main advantage of trading using opposite Ecclesiastical Insurance and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecclesiastical Insurance 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.The idea behind Ecclesiastical Insurance Office and National Beverage Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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