Correlation Between Luckin Coffee and National Bank
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and National Bank 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 Luckin Coffee and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and National Bank Holdings, you can compare the effects of market volatilities on Luckin Coffee and National Bank 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 Luckin Coffee with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and National Bank.
Diversification Opportunities for Luckin Coffee and National Bank
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Luckin and National is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings and Luckin Coffee 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 Luckin Coffee are associated (or correlated) with National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and National Bank go up and down completely randomly.
Pair Corralation between Luckin Coffee and National Bank
Assuming the 90 days trading horizon Luckin Coffee is expected to generate 1.89 times more return on investment than National Bank. However, Luckin Coffee is 1.89 times more volatile than National Bank Holdings. It trades about 0.02 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.03 per unit of risk. If you would invest 2,301 in Luckin Coffee on August 29, 2024 and sell it today you would lose (161.00) from holding Luckin Coffee or give up 7.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luckin Coffee vs. National Bank Holdings
Performance |
| Timeline |
| Luckin Coffee |
| National Bank Holdings |
Luckin Coffee and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and National Bank
The main advantage of trading using opposite Luckin Coffee and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, National Bank 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 Bank will offset losses from the drop in National Bank's long position.| Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc |
| National Bank vs. Austevoll Seafood ASA | National Bank vs. Webster Financial | National Bank vs. CONAGRA FOODS | National Bank vs. Beyond Meat |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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