Correlation Between National Beverage and 88 Energy

Can any of the company-specific risk be diversified away by investing in both National Beverage and 88 Energy 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 88 Energy 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 88 Energy, you can compare the effects of market volatilities on National Beverage and 88 Energy 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 88 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and 88 Energy.

Diversification Opportunities for National Beverage and 88 Energy

0.08

Correlation Coefficient

National Beverage  88 Energy

Significant diversification

The 3 months correlation between National and 88E is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and 88 Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 88 Energy 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 88 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 88 Energy has no effect on the direction of National Beverage i.e., National Beverage and 88 Energy go up and down completely randomly.

Pair Corralation between National Beverage and 88 Energy

Assuming the 90 days trading horizon National Beverage Corp is expected to generate 0.62 times more return on investment than 88 Energy. However, National Beverage Corp is 1.62 times less risky than 88 Energy. It trades about 0.0 of its potential returns per unit of risk. 88 Energy is currently generating about -0.05 per unit of risk. If you would invest  5,094  in National Beverage Corp on October 7, 2024 and sell it today you would lose (809.00) from holding National Beverage Corp or give up 15.88% of portfolio value over 90 days.

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

National Beverage Corp  vs.  88 Energy

National Beverage Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, National Beverage is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

88 Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 88 Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with National Beverage and 88 Energy

The main advantage of trading using opposite National Beverage and 88 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, 88 Energy 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 88 Energy will offset losses from the drop in 88 Energy's long position.

The idea behind National Beverage Corp and 88 Energy 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.