Correlation Between National Beverage and LENSAR
Can any of the company-specific risk be diversified away by investing in both National Beverage and LENSAR 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 LENSAR 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 LENSAR Inc, you can compare the effects of market volatilities on National Beverage and LENSAR 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 LENSAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and LENSAR.
Diversification Opportunities for National Beverage and LENSAR
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and LENSAR is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR 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 LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of National Beverage i.e., National Beverage and LENSAR go up and down completely randomly.
Pair Corralation between National Beverage and LENSAR
Given the investment horizon of 90 days National Beverage is expected to generate 4.59 times less return on investment than LENSAR. But when comparing it to its historical volatility, National Beverage Corp is 3.08 times less risky than LENSAR. It trades about 0.24 of its potential returns per unit of risk. LENSAR Inc is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 538.00 in LENSAR Inc on September 2, 2024 and sell it today you would earn a total of 215.00 from holding LENSAR Inc or generate 39.96% 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. LENSAR Inc
Performance |
| Timeline |
| National Beverage Corp |
| LENSAR Inc |
National Beverage and LENSAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and LENSAR
The main advantage of trading using opposite National Beverage and LENSAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, LENSAR 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 LENSAR will offset losses from the drop in LENSAR'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 |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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