Correlation Between European Wax and National Beverage
Can any of the company-specific risk be diversified away by investing in both European Wax 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 European Wax and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Wax Center and National Beverage Corp, you can compare the effects of market volatilities on European Wax 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 European Wax with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Wax and National Beverage.
Diversification Opportunities for European Wax and National Beverage
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between European and National is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center 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 European Wax 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 European Wax Center 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 European Wax i.e., European Wax and National Beverage go up and down completely randomly.
Pair Corralation between European Wax and National Beverage
Given the investment horizon of 90 days European Wax Center is expected to under-perform the National Beverage. In addition to that, European Wax is 4.67 times more volatile than National Beverage Corp. It trades about -0.13 of its total potential returns per unit of risk. National Beverage Corp is currently generating about 0.17 per unit of volatility. If you would invest 4,568 in National Beverage Corp on August 27, 2024 and sell it today you would earn a total of 219.00 from holding National Beverage Corp or generate 4.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Wax Center vs. National Beverage Corp
Performance |
| Timeline |
| European Wax Center |
| National Beverage Corp |
European Wax and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Wax and National Beverage
The main advantage of trading using opposite European Wax and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax 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.| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Mannatech Incorporated | European Wax vs. Spectrum Brands Holdings |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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