Correlation Between National Beverage and Western Acquisition
Can any of the company-specific risk be diversified away by investing in both National Beverage and Western Acquisition 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 Western Acquisition 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 Western Acquisition Ventures, you can compare the effects of market volatilities on National Beverage and Western Acquisition 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 Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Western Acquisition.
Diversification Opportunities for National Beverage and Western Acquisition
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Western is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of National Beverage i.e., National Beverage and Western Acquisition go up and down completely randomly.
Pair Corralation between National Beverage and Western Acquisition
Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.73 times more return on investment than Western Acquisition. However, National Beverage Corp is 1.36 times less risky than Western Acquisition. It trades about 0.26 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about -0.17 per unit of risk. If you would invest 4,568 in National Beverage Corp on August 28, 2024 and sell it today you would earn a total of 394.00 from holding National Beverage Corp or generate 8.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Western Acquisition Ventures
Performance |
| Timeline |
| National Beverage Corp |
| Western Acquisition |
National Beverage and Western Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Western Acquisition
The main advantage of trading using opposite National Beverage and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition'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 |
| Western Acquisition vs. PowerUp Acquisition Corp | Western Acquisition vs. Aurora Innovation | Western Acquisition vs. HUMANA INC | Western Acquisition vs. Aquagold International |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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