Correlation Between National Beverage and Avadel Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both National Beverage and Avadel Pharmaceuticals 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 Avadel Pharmaceuticals 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 Avadel Pharmaceuticals PLC, you can compare the effects of market volatilities on National Beverage and Avadel Pharmaceuticals 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 Avadel Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Avadel Pharmaceuticals.
Diversification Opportunities for National Beverage and Avadel Pharmaceuticals
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Avadel is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Avadel Pharmaceuticals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avadel Pharmaceuticals 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 Avadel Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avadel Pharmaceuticals has no effect on the direction of National Beverage i.e., National Beverage and Avadel Pharmaceuticals go up and down completely randomly.
Pair Corralation between National Beverage and Avadel Pharmaceuticals
Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.49 times more return on investment than Avadel Pharmaceuticals. However, National Beverage Corp is 2.02 times less risky than Avadel Pharmaceuticals. It trades about -0.11 of its potential returns per unit of risk. Avadel Pharmaceuticals PLC is currently generating about -0.11 per unit of risk. If you would invest 4,962 in National Beverage Corp on September 14, 2024 and sell it today you would lose (263.00) from holding National Beverage Corp or give up 5.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Avadel Pharmaceuticals PLC
Performance |
| Timeline |
| National Beverage Corp |
| Avadel Pharmaceuticals |
National Beverage and Avadel Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Avadel Pharmaceuticals
The main advantage of trading using opposite National Beverage and Avadel Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Avadel Pharmaceuticals 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 Avadel Pharmaceuticals will offset losses from the drop in Avadel Pharmaceuticals' long position.| National Beverage vs. Coca Cola Femsa SAB | National Beverage vs. Keurig Dr Pepper | National Beverage vs. Embotelladora Andina SA | National Beverage vs. Coca Cola European Partners |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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