Correlation Between Global Ship and National Beverage
Can any of the company-specific risk be diversified away by investing in both Global Ship and National Beverage 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 Global Ship and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and National Beverage Corp, you can compare the effects of market volatilities on Global Ship and National Beverage 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 Global Ship with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and National Beverage.
Diversification Opportunities for Global Ship and National Beverage
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and National is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and Global Ship 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 Global Ship Lease are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Global Ship i.e., Global Ship and National Beverage go up and down completely randomly.
Pair Corralation between Global Ship and National Beverage
Assuming the 90 days trading horizon Global Ship is expected to generate 1.08 times less return on investment than National Beverage. But when comparing it to its historical volatility, Global Ship Lease is 2.11 times less risky than National Beverage. It trades about 0.06 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,148 in National Beverage Corp on August 31, 2024 and sell it today you would earn a total of 791.00 from holding National Beverage Corp or generate 19.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. National Beverage Corp
Performance |
| Timeline |
| Global Ship Lease |
| National Beverage Corp |
Global Ship and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and National Beverage
The main advantage of trading using opposite Global Ship and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.The idea behind Global Ship Lease and National Beverage Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Global Correlations Find global opportunities by holding instruments from different markets |