Correlation Between National Beverage and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both National Beverage and Nextera Energy 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 Nextera Energy 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 Nextera Energy, you can compare the effects of market volatilities on National Beverage and Nextera Energy 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 Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Nextera Energy.
Diversification Opportunities for National Beverage and Nextera Energy
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between National and Nextera is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Nextera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy 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 Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy has no effect on the direction of National Beverage i.e., National Beverage and Nextera Energy go up and down completely randomly.
Pair Corralation between National Beverage and Nextera Energy
Given the investment horizon of 90 days National Beverage Corp is expected to under-perform the Nextera Energy. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.26 times less risky than Nextera Energy. The stock trades about -0.14 of its potential returns per unit of risk. The Nextera Energy is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 7,249 in Nextera Energy on October 23, 2024 and sell it today you would lose (164.00) from holding Nextera Energy or give up 2.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Nextera Energy
Performance |
| Timeline |
| National Beverage Corp |
| Nextera Energy |
National Beverage and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Nextera Energy
The main advantage of trading using opposite National Beverage and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Nextera Energy 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 Nextera Energy will offset losses from the drop in Nextera Energy'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 |
| Nextera Energy vs. Weibo Corp | Nextera Energy vs. Major Drilling Group | Nextera Energy vs. AKITA Drilling | Nextera Energy vs. Definitive Healthcare Corp |
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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