Correlation Between National Beverage and Lotus Technology
Can any of the company-specific risk be diversified away by investing in both National Beverage and Lotus Technology 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 Lotus Technology 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 Lotus Technology Warrants, you can compare the effects of market volatilities on National Beverage and Lotus Technology 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 Lotus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Lotus Technology.
Diversification Opportunities for National Beverage and Lotus Technology
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Lotus is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Lotus Technology Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Technology Warrants 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 Lotus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Technology Warrants has no effect on the direction of National Beverage i.e., National Beverage and Lotus Technology go up and down completely randomly.
Pair Corralation between National Beverage and Lotus Technology
Given the investment horizon of 90 days National Beverage is expected to generate 1.41 times less return on investment than Lotus Technology. But when comparing it to its historical volatility, National Beverage Corp is 7.32 times less risky than Lotus Technology. It trades about 0.09 of its potential returns per unit of risk. Lotus Technology Warrants is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Lotus Technology Warrants on September 4, 2024 and sell it today you would lose (3.00) from holding Lotus Technology Warrants or give up 9.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 60.94% |
| Values | Daily Returns |
National Beverage Corp vs. Lotus Technology Warrants
Performance |
| Timeline |
| National Beverage Corp |
| Lotus Technology Warrants |
National Beverage and Lotus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Lotus Technology
The main advantage of trading using opposite National Beverage and Lotus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Lotus Technology 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 Lotus Technology will offset losses from the drop in Lotus Technology'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 |
| Lotus Technology vs. National Beverage Corp | Lotus Technology vs. Fomento Economico Mexicano | Lotus Technology vs. Boston Beer | Lotus Technology vs. Suntory Beverage Food |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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