Correlation Between National Beverage and Veolia Environnement

Can any of the company-specific risk be diversified away by investing in both National Beverage and Veolia Environnement 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 Veolia Environnement 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 Veolia Environnement VE, you can compare the effects of market volatilities on National Beverage and Veolia Environnement 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 Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Veolia Environnement.

Diversification Opportunities for National Beverage and Veolia Environnement

-0.83

Correlation Coefficient

National Beverage  Veolia Environnement

Pay attention - limited upside

The 3 months correlation between National and Veolia is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement 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 Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of National Beverage i.e., National Beverage and Veolia Environnement go up and down completely randomly.

Pair Corralation between National Beverage and Veolia Environnement

Assuming the 90 days trading horizon National Beverage Corp is expected to under-perform the Veolia Environnement. In addition to that, National Beverage is 2.04 times more volatile than Veolia Environnement VE. It trades about -0.11 of its total potential returns per unit of risk. Veolia Environnement VE is currently generating about -0.09 per unit of volatility. If you would invest  2,845  in Veolia Environnement VE on September 15, 2024 and sell it today you would lose (56.00) from holding Veolia Environnement VE or give up 1.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

National Beverage Corp  vs.  Veolia Environnement VE

National Beverage Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, National Beverage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Veolia Environnement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veolia Environnement VE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with National Beverage and Veolia Environnement

The main advantage of trading using opposite National Beverage and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement's long position.

The idea behind National Beverage Corp and Veolia Environnement VE 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..