Correlation Between National Beverage and Leef Brands
Can any of the company-specific risk be diversified away by investing in both National Beverage and Leef Brands 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 Leef Brands 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 Leef Brands, you can compare the effects of market volatilities on National Beverage and Leef Brands 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 Leef Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Leef Brands.
Diversification Opportunities for National Beverage and Leef Brands
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Leef is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Leef Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leef Brands 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 Leef Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leef Brands has no effect on the direction of National Beverage i.e., National Beverage and Leef Brands go up and down completely randomly.
Pair Corralation between National Beverage and Leef Brands
Given the investment horizon of 90 days National Beverage Corp is expected to under-perform the Leef Brands. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 4.28 times less risky than Leef Brands. The stock trades about -0.09 of its potential returns per unit of risk. The Leef Brands is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Leef Brands on September 12, 2024 and sell it today you would earn a total of 2.00 from holding Leef Brands or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
National Beverage Corp vs. Leef Brands
Performance |
| Timeline |
| National Beverage Corp |
| Leef Brands |
National Beverage and Leef Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Leef Brands
The main advantage of trading using opposite National Beverage and Leef Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Leef Brands 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 Leef Brands will offset losses from the drop in Leef Brands' 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 |
| Leef Brands vs. Coty Inc | Leef Brands vs. Canlan Ice Sports | Leef Brands vs. Delek Logistics Partners | Leef Brands vs. Paltalk |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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