Correlation Between National Beverage and Affiliated Resources
Can any of the company-specific risk be diversified away by investing in both National Beverage and Affiliated Resources 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 National Beverage and Affiliated Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Affiliated Resources Corp, you can compare the effects of market volatilities on National Beverage and Affiliated Resources 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 National Beverage with a short position of Affiliated Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Affiliated Resources.
Diversification Opportunities for National Beverage and Affiliated Resources
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Affiliated is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Affiliated Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Resources Corp and National Beverage 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 National Beverage Corp are associated (or correlated) with Affiliated Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Resources Corp has no effect on the direction of National Beverage i.e., National Beverage and Affiliated Resources go up and down completely randomly.
Pair Corralation between National Beverage and Affiliated Resources
Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.31 times more return on investment than Affiliated Resources. However, National Beverage Corp is 3.23 times less risky than Affiliated Resources. It trades about 0.14 of its potential returns per unit of risk. Affiliated Resources Corp is currently generating about -0.04 per unit of risk. If you would invest 4,770 in National Beverage Corp on September 4, 2024 and sell it today you would earn a total of 182.00 from holding National Beverage Corp or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
National Beverage Corp vs. Affiliated Resources Corp
Performance |
| Timeline |
| National Beverage Corp |
| Affiliated Resources Corp |
National Beverage and Affiliated Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Affiliated Resources
The main advantage of trading using opposite National Beverage and Affiliated Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Affiliated Resources 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 Affiliated Resources will offset losses from the drop in Affiliated Resources' long position.| National Beverage vs. Celsius Holdings | National Beverage vs. Monster Beverage Corp | National Beverage vs. Coca Cola Femsa SAB | National Beverage vs. Keurig Dr Pepper |
| Affiliated Resources vs. Westrock Coffee | Affiliated Resources vs. National Beverage Corp | Affiliated Resources vs. Oatly Group AB | Affiliated Resources vs. Thai Beverage PCL |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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