Correlation Between National Beverage and Custom Truck
Can any of the company-specific risk be diversified away by investing in both National Beverage and Custom Truck 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 Custom Truck 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 Custom Truck One, you can compare the effects of market volatilities on National Beverage and Custom Truck 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 Custom Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Custom Truck.
Diversification Opportunities for National Beverage and Custom Truck
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Custom is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Custom Truck One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custom Truck One 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 Custom Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custom Truck One has no effect on the direction of National Beverage i.e., National Beverage and Custom Truck go up and down completely randomly.
Pair Corralation between National Beverage and Custom Truck
Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.57 times more return on investment than Custom Truck. However, National Beverage Corp is 1.74 times less risky than Custom Truck. It trades about 0.03 of its potential returns per unit of risk. Custom Truck One is currently generating about 0.01 per unit of risk. If you would invest 4,148 in National Beverage Corp on August 31, 2024 and sell it today you would earn a total of 791.00 from holding National Beverage Corp or generate 19.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
National Beverage Corp vs. Custom Truck One
Performance |
| Timeline |
| National Beverage Corp |
| Custom Truck One |
National Beverage and Custom Truck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Custom Truck
The main advantage of trading using opposite National Beverage and Custom Truck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Custom Truck 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 Custom Truck will offset losses from the drop in Custom Truck's 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 |
| Custom Truck vs. PROG Holdings | Custom Truck vs. McGrath RentCorp | Custom Truck vs. HE Equipment Services | Custom Truck vs. GATX Corporation |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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