Correlation Between National Beverage and Western Copper
Can any of the company-specific risk be diversified away by investing in both National Beverage and Western Copper 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 Copper 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 Copper and, you can compare the effects of market volatilities on National Beverage and Western Copper 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 Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Western Copper.
Diversification Opportunities for National Beverage and Western Copper
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and Western is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper 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 Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of National Beverage i.e., National Beverage and Western Copper go up and down completely randomly.
Pair Corralation between National Beverage and Western Copper
Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.43 times more return on investment than Western Copper. However, National Beverage Corp is 2.35 times less risky than Western Copper. It trades about 0.27 of its potential returns per unit of risk. Western Copper and is currently generating about 0.0 per unit of risk. If you would invest 4,530 in National Beverage Corp on August 30, 2024 and sell it today you would earn a total of 430.00 from holding National Beverage Corp or generate 9.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Western Copper and
Performance |
| Timeline |
| National Beverage Corp |
| Western Copper |
National Beverage and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Western Copper
The main advantage of trading using opposite National Beverage and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Western Copper 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 Copper will offset losses from the drop in Western Copper'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 Copper vs. Fury Gold Mines | Western Copper vs. EMX Royalty Corp | Western Copper vs. Nevada King Gold | Western Copper vs. Aftermath Silver |
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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