Correlation Between National Beverage and Aquestive Therapeutics
Can any of the company-specific risk be diversified away by investing in both National Beverage and Aquestive Therapeutics 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 Aquestive Therapeutics 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 Aquestive Therapeutics, you can compare the effects of market volatilities on National Beverage and Aquestive Therapeutics 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 Aquestive Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Aquestive Therapeutics.
Diversification Opportunities for National Beverage and Aquestive Therapeutics
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Aquestive is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics 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 Aquestive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquestive Therapeutics has no effect on the direction of National Beverage i.e., National Beverage and Aquestive Therapeutics go up and down completely randomly.
Pair Corralation between National Beverage and Aquestive Therapeutics
Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.37 times more return on investment than Aquestive Therapeutics. However, National Beverage Corp is 2.68 times less risky than Aquestive Therapeutics. It trades about -0.03 of its potential returns per unit of risk. Aquestive Therapeutics is currently generating about -0.28 per unit of risk. If you would invest 4,240 in National Beverage Corp on November 3, 2024 and sell it today you would lose (35.00) from holding National Beverage Corp or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Aquestive Therapeutics
Performance |
| Timeline |
| National Beverage Corp |
| Aquestive Therapeutics |
National Beverage and Aquestive Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Aquestive Therapeutics
The main advantage of trading using opposite National Beverage and Aquestive Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Aquestive Therapeutics 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 Aquestive Therapeutics will offset losses from the drop in Aquestive Therapeutics' 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 |
| Aquestive Therapeutics vs. Evoke Pharma | Aquestive Therapeutics vs. Dynavax Technologies | Aquestive Therapeutics vs. Amphastar P | Aquestive Therapeutics vs. Lantheus 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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