Correlation Between National Beverage and Hertz Global
Can any of the company-specific risk be diversified away by investing in both National Beverage and Hertz Global 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 Hertz Global 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 Hertz Global Holdings, you can compare the effects of market volatilities on National Beverage and Hertz Global 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 Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Hertz Global.
Diversification Opportunities for National Beverage and Hertz Global
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Hertz is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Hertz Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Holdings 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 Hertz Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hertz Global Holdings has no effect on the direction of National Beverage i.e., National Beverage and Hertz Global go up and down completely randomly.
Pair Corralation between National Beverage and Hertz Global
Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.43 times more return on investment than Hertz Global. However, National Beverage Corp is 2.34 times less risky than Hertz Global. It trades about 0.03 of its potential returns per unit of risk. Hertz Global Holdings is currently generating about -0.04 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 | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
National Beverage Corp vs. Hertz Global Holdings
Performance |
| Timeline |
| National Beverage Corp |
| Hertz Global Holdings |
National Beverage and Hertz Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Hertz Global
The main advantage of trading using opposite National Beverage and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Hertz Global 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 Hertz Global will offset losses from the drop in Hertz Global'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 |
| Hertz Global vs. United Rentals | Hertz Global vs. Ryder System | Hertz Global vs. Herc Holdings | Hertz Global vs. Air Lease |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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