Correlation Between National Beverage and Life Time
Can any of the company-specific risk be diversified away by investing in both National Beverage and Life Time 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 Life Time 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 Life Time Group, you can compare the effects of market volatilities on National Beverage and Life Time 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 Life Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Life Time.
Diversification Opportunities for National Beverage and Life Time
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Life is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time Group 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 Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of National Beverage i.e., National Beverage and Life Time go up and down completely randomly.
Pair Corralation between National Beverage and Life Time
Given the investment horizon of 90 days National Beverage is expected to generate 1.41 times less return on investment than Life Time. But when comparing it to its historical volatility, National Beverage Corp is 1.37 times less risky than Life Time. It trades about 0.17 of its potential returns per unit of risk. Life Time Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,300 in Life Time Group on August 27, 2024 and sell it today you would earn a total of 155.00 from holding Life Time Group or generate 6.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Life Time Group
Performance |
| Timeline |
| National Beverage Corp |
| Life Time Group |
National Beverage and Life Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Life Time
The main advantage of trading using opposite National Beverage and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Life Time 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 Life Time will offset losses from the drop in Life Time'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 Global Correlations module to find global opportunities by holding instruments from different markets.
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