Correlation Between National Beverage and Dana
Can any of the company-specific risk be diversified away by investing in both National Beverage and Dana 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 Dana 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 Dana Inc, you can compare the effects of market volatilities on National Beverage and Dana 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 Dana. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Dana.
Diversification Opportunities for National Beverage and Dana
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Dana is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc 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 Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of National Beverage i.e., National Beverage and Dana go up and down completely randomly.
Pair Corralation between National Beverage and Dana
Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.64 times more return on investment than Dana. However, National Beverage Corp is 1.57 times less risky than Dana. It trades about 0.01 of its potential returns per unit of risk. Dana Inc is currently generating about 0.01 per unit of risk. If you would invest 4,639 in National Beverage Corp on September 12, 2024 and sell it today you would earn a total of 42.00 from holding National Beverage Corp or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Dana Inc
Performance |
| Timeline |
| National Beverage Corp |
| Dana Inc |
National Beverage and Dana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Dana
The main advantage of trading using opposite National Beverage and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Dana 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 Dana will offset losses from the drop in Dana'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 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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