Correlation Between National Beverage and CATLIN GROUP

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

Diversification Opportunities for National Beverage and CATLIN GROUP

0.19

Correlation Coefficient

National Beverage  CATLIN GROUP

Average diversification

The 3 months correlation between National and CATLIN is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and CATLIN GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATLIN GROUP 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 CATLIN GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CATLIN GROUP has no effect on the direction of National Beverage i.e., National Beverage and CATLIN GROUP go up and down completely randomly.

Pair Corralation between National Beverage and CATLIN GROUP

Assuming the 90 days trading horizon National Beverage Corp is expected to under-perform the CATLIN GROUP. In addition to that, National Beverage is 2.17 times more volatile than CATLIN GROUP . It trades about -0.06 of its total potential returns per unit of risk. CATLIN GROUP is currently generating about -0.12 per unit of volatility. If you would invest  9,700  in CATLIN GROUP on October 20, 2024 and sell it today you would lose (550.00) from holding CATLIN GROUP or give up 5.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

National Beverage Corp  vs.  CATLIN GROUP

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.

CATLIN GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CATLIN GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CATLIN GROUP is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with National Beverage and CATLIN GROUP

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

The idea behind National Beverage Corp and CATLIN GROUP 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.