Correlation Between National Beverage and Safety Shot
Can any of the company-specific risk be diversified away by investing in both National Beverage and Safety Shot 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 Safety Shot 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 Safety Shot, you can compare the effects of market volatilities on National Beverage and Safety Shot 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 Safety Shot. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Safety Shot.
Diversification Opportunities for National Beverage and Safety Shot
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Safety is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of National Beverage i.e., National Beverage and Safety Shot go up and down completely randomly.
Pair Corralation between National Beverage and Safety Shot
Given the investment horizon of 90 days National Beverage is expected to generate 56.61 times less return on investment than Safety Shot. But when comparing it to its historical volatility, National Beverage Corp is 11.98 times less risky than Safety Shot. It trades about 0.02 of its potential returns per unit of risk. Safety Shot is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 39.00 in Safety Shot on August 30, 2024 and sell it today you would lose (26.00) from holding Safety Shot or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 60.08% |
| Values | Daily Returns |
National Beverage Corp vs. Safety Shot
Performance |
| Timeline |
| National Beverage Corp |
| Safety Shot |
National Beverage and Safety Shot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Safety Shot
The main advantage of trading using opposite National Beverage and Safety Shot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Safety Shot 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 Safety Shot will offset losses from the drop in Safety Shot'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 |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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