Correlation Between National Beverage and Global E
Can any of the company-specific risk be diversified away by investing in both National Beverage and Global E 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 Global E 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 Global E Online, you can compare the effects of market volatilities on National Beverage and Global E 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 Global E. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Global E.
Diversification Opportunities for National Beverage and Global E
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Global is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online 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 Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of National Beverage i.e., National Beverage and Global E go up and down completely randomly.
Pair Corralation between National Beverage and Global E
Given the investment horizon of 90 days National Beverage Corp is expected to under-perform the Global E. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.54 times less risky than Global E. The stock trades about -0.09 of its potential returns per unit of risk. The Global E Online is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 4,020 in Global E Online on September 12, 2024 and sell it today you would earn a total of 1,332 from holding Global E Online or generate 33.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Global E Online
Performance |
| Timeline |
| National Beverage Corp |
| Global E Online |
National Beverage and Global E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Global E
The main advantage of trading using opposite National Beverage and Global E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Global E 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 Global E will offset losses from the drop in Global E'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 |
| Global E vs. MercadoLibre | Global E vs. PDD Holdings | Global E vs. JD Inc Adr | Global E vs. Alibaba Group Holding |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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